FTSE 100 falls 3% on EU funding fears
The UK FTSE 100 fell by 3% today amid concerns that austerity measures taken in Greece, Portugal and Spain will not only impact upon the economic revival in Europe but are likely to be replicated by other European countries. While there is no doubt that Portugal and Spain were two of the favourites on the list behind Greece with regards to funding issues, we also have the likes of the UK where the budget deficit as a percentage of GDP is far greater than any other European country.
There has even been talk over the last few days that the UK could lose its AAA rating with the credit rating agencies which would increase the cost of financing debt both now and in the future. This would be a nightmare scenario for the UK government and while there is no certainty that the rating will be reduced it is becoming more and more of an issue. In many ways we have seen the "tail wag the dog" as the UK stock market continues to head downwards on fears about UK finances.
Only a few days ago we saw the bounce in investment markets after the coalition government was announced although these times of joy have quickly disappeared.
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