Joined: 03 Jun 2005
|Posted: Tue Jul 12, 2011 9:04 am Post subject: BRITAIN FACING ANOTHER EU CONTRIBUTION FOR ITALY
|Britain facing a £43billion hit if the Italian economy collapses
By Tim Shipman, Deputy Political Editor
Last updated at 8:31 AM on 12th July 2011
Talks: Chancellor of the Exchequer George Osborne will meet with finance ministers in Brussels today
Britain faces losses of nearly £43billion if the Italian economy collapses, according figures compiled by the Bank of England.
The level of exposure was revealed as Eurozone nations met in Brussels amid warnings that the financial contagion is spreading to Europe’s third biggest economy.
British banks and investment houses risk losses of £7.9billion if the Italian government defaults on its debts and another £5.7billion if Italian banks collapse.
Financial firms face losing another £29.2billion should Italian companies fold as the debt crisis spirals.
Chancellor George Osborne was travelling last night to Brussels for a meeting of the EU’s 27 finance ministers today.
Last night, a meeting of Eurozone ministers, to which Britain is not invited since the UK is not part of the single currency, discussed plans for a fresh bailout of Greece.
A Treasury source said: ‘The important thing is to get the Greek bailout sorted out, which will spread confidence through the Eurozone.’
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But Gary Jenkins, head of fixed income at Evolution Securities, said: ‘Italy with a debt to GDP ratio of 120 per cent and debt of 1.6trillion euros is a pretty big elephant to have in the room. You have to stop the contagion getting to Italy.’
Yesterday the Milan stock market plunged by 3.4 per cent, wiping billions off the value of Italian companies.
Pressure: There could be trouble ahead for Italian Prime Minister Silvio Berlusconi
The interest rate on government bonds rose from 5.3 per cent to 5.6 per cent, indicating a fall in confidence.
British taxpayers have already contributed £12.5billion in aid to Greece, Ireland and Portugal but the Government has refused to join a second EU bailout fund for Greece.
The Rome government has already announced £40billion of cuts after Italy’s credit rating was downgraded last month.
Jane Foley, analyst with finance house Rabobank, said: ‘The fact that contagion is spreading marks the failure of politicians to draw a line under the euro-crisis.’
The qicker this communist state goes down the better, we can then get rid of all the people who should not be here and close our borders for good.