PM and King make plans for Grexit
TOP GOVERNMENT and Bank of England figures met yesterday to bash out a plan of action in case of a Eurozone breakup, as the crisis in Greece and Spain intensifies.
Prime Minister David Cameron and chancellor George Osborne met Bank boss Mervyn King and Financial Services Authority head Adair Turner to decide how the authorities should protect Britain’s financial system and economy from an implosion of the country’s biggest trading partner.
Deputy Prime Minister Nick Clegg and Treasury secretary Danny Alexander also attended.
The Spanish government’s borrowing costs yesterday crept back up towards the seven per cent “danger level”, raising fears that it will no longer be able to afford to fund its spending.
Yields on 10-year bonds briefly broke the 6.5 per cent mark – their highest level since last December, when the European Central Bank pumped €1 trillion (£800bn) in cheap loans into the region’s banks to avert a new credit crunch.
Greece, Ireland and Portugal were all bailed out after borrowing costs exceeded seven per cent.
Fears grew over the Spanish government’s ability to bear growing bank bailout costs, with a new €19bn rescue being thrashed out for leading institutions including troubled Bankia.
Italy’s government also saw its borrowing costs rise at debt auctions.
It sold €3.2bn in two-year bonds, paying an interest rate of 4.037 per cent – up sharply from the 3.36 per cent paid just a month ago.