Greece worries markets on reform plan

Financial Times
May 20, 2011

The eurozone crisis deepened on Friday as Greek economic reform plans were delayed, sparking tension in the financial markets over the country’s ability to rein back its mounting public debt.

The euro dropped against the dollar, Greek bond yields rose to euro-era highs and fears of contagion to Spain, the key economy, increased amid worries that Athens’ determination to implement its recovery plan was waning.

Fitch, the rating agency, also hit Greece with a multi-notch credit downgrade, warning that the country faced big challenges in turning round its reversing economy.

Harvinder Sian, euro rates strategist at RBC, said: “The Greek crisis has ratcheted up this week because policymakers and central bankers cannot decide the way forward.”

Gary Jenkins, head of fixed income at Evolution Securities, added: “It is a mess. Division among the politicians and central bankers is not helping.

“The problems in Greece could spread to the larger economies.”

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