Amid rumours that gigantic sums of cash are
being smuggled out of Greece, the on looking governor of the BOE, Sir Mervyn
King, said the euro zone could enter a “period of intense economic chaos” if
the Greeks decide to separate themselves from the single currency.
Britain’s economy, itself in dire straits,
could be severely affected by the Greek fallout as one estimate put a Greek
exit and the resulting cost to the E.U. at a stunning one trillion dollars.
The British PM David Cameron commented on a
situation where Europe needed to “make up or break up” adding that swift and
decisive policy making by the euro zones economic ministers was needed.
If, as expected, Greece makes a disorderly
exit from the euro it is predicted by some financial experts it will be the
biggest financial crisis since the total evaporation of Lehman Brothers four
years ago, and could result in up to a 5 percent fall in output equalling a
cool one trillion dollars.
“It’s utterly unthinkable,” said Tony
Harris, Senior Vice President of Equity Trading at Softbank CIBC International,
“We could be looking at a decade or more of stagnation in Europe. The zone
could probably handle a planned split with the single currency, losses of say
300 billion dollars, but if the current chaotic conditions are perpetuated it
will be a disastrous outcome.”
With prospects of a coalition government
off the table this month, capital has been shifting out of the country at an
alarming rate amid fears the negative developments could result in panic and
public disorder. In a single day, the central bank reported, over 900 million
euro was cleared out.
The mood hit the markets this week as
European shares and the single currency both took a slide in response to press
releases revealing the E.U. would halt its financial aid to Greece.
