European stock markets rise on Greece bailout plan
European stock markets have today moved higher after news of over the weekend that a €30 billion bailout package has been agreed by European Union leaders for the Greek economy. There is also further support available from the International Monetary Fund which could well inject further funding at a later date. As a consequence, we have seen European markets move higher as investor sentiment, at least in the short term, appears to have improved.
While there is no doubt that news of the bailout is most welcome there are concerns that the Greek economy still has much pain to come. There is no doubt that the budget will need to be reined in, taxes increased and there is likely to be significant job cuts in the public sector. This is the price which Greece is having to pay for years of overspending, which many investors and analysts had highlighted some time ago.
The European Union was somewhat forced to act with regards to a bailout package because ultimately a collapse of the Greek economy would have led to significant pressure on European debt markets and other European economies. This also prompts the question as to whether the European Union has grown too quickly and taken on too many weak economies?
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