THE benchmark FTSE 100 Index is facing months of uncertainty as it takes a battering from the spiralling UK debt and an ill wind blowing from Europe, according to City experts.
Markets were hit by huge losses last week as politicians failed to provide concrete plans to deal with the sovereign debt crisis which has cast a shadow over global economic recovery. With the FTSE falling below the 5,000 mark on Friday – to its lowest level since November 2009 – fears that the fragile global economic recovery was about to be derailed were raised.
Germany’s ban on short selling and Angela Merkel’s attack on the financial sector, perceived by some as politically motivated, have poured petrol on the problems, as has Bank of Spain’s move to take control of CajaSur bank.
Analyst James Hughes at CMC Markets sets a scene for the rest of the year where European business and political leaders spend their time making emergency responses to reassure markets hungry for stability. He said: “European leaders try to stop markets plummeting too far. That action should keep the FTSE above the 5,000 mark. “However if the euro goes into meltdown that will be another matter, that will be a massive problem.”