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Eurozone back under pressure amid concern over EU banks
Date 08/09/2010 12:50  Author webmaster  Hits 849  Language Global
08 SEP 2010

By Leigh Phillips | EUobserver

The euro drooped and bond spreads for Greece, Ireland and Portugal jumped on Tuesday (7 September) due to a revival of investor fears bout the eurozone, even as European Commission President Jose Manuel Barroso hailed the EU for emerging successfully from the economic crisis in his first State of the Union address.

The yen hit a nine-year high against the euro while the Swiss franc soared to its all-time best position against the European single currency. Separately, the costs to the Greek government for borrowing compared to Germany jumped slightly while the costs to both Portugal and Greece climbed to levels not seen since the creation of the euro.

It is thought that Portugal took a hit as a result of revelations that the country's banks had gone knocking at the door of the European Central Bank for a record amount of cash as a result of troubles raising funds privately.

Meanwhile, Ireland is dealing with the ongoing consequences of the black hole of debt that is the nationalised Anglo Irish Bank. Last week, the company said it will probably need some €25 billion in fresh capital, equivalent to a full 19 percent of the country's GNP. Credit rating agency Standard & Poor's has said that it believes this to be low-balling the true figure, estimating that the real cost could come to €35 billion.

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