Eurozone Potential Threat To UK Economy

Published on May 20, 2010 | Author: admin

Filed Under UK Debt | Leave a Comment 

Bad news for property market?

The Bank of England has warned problems in Europe can pose a potential to the British economy. Adam Posen, an American economist and member of the Bank’s Monetary Policy Committee (MPC) said Britain would be in trouble if the Eurozone fell back into recession because it is so heavily dependent on the region for trade. “This is a huge risk to the UK. Sixty per cent of our trade is with the euro area and if the euro area goes down then that does have a huge impact on us. There’s not that much we can do about it.” it has been predicted that the Eurozone was in store for very low growth over the foreseeable future, which explains the euro’s decline and market volatility despite a $1 trillion (£693bn) rescue package agreed by Eurozone members last week. Growth is likely going to be very slow in much of the euro area for the next several years,” George Osborne, the new Chancellor, opposed proposals for an increase to the EU’s 2011 budget, instead demanding a freeze. He said “it was unreasonable for Brussels to expect countries to accept a 6% budget increase – including a 4.5% increase in administration costs – at a time when there was a need to rein in spending following the global financial crisis”.

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