bail out for Spain could prompt assistance for Greece
The recent bailout of banks in Spain could prompt voters in Greece to decide against backing austerity measures, experts have warned.
Last month's election in Greece proved indecisive and following the failure of talks to put together a coalition government, the electorate is going to the polls again this weekend.
The outcome hinges largely on whether voters choose to support the austerity measures demanded by the European Union in exchange for financial support.
However, foreign exchange specialist HiFX believes the recent bailout of several Spanish banks may not go down well with the Greek public.
Jason Gaywood, director of the organisation, said this is because the money is going to the banks themselves, rather than to Spain's government.
This, he said, "represents an ill-disguised bypassing of the austerity measures already imposed on Ireland, Portugal and Greece in previous bailouts".
Mr Gaywood described this as a "moving of the goalposts" that could boost public support for political parties in Greece who oppose the EU's austerity measures, such as the left wing group Syriza.
"This result is likely to have far-reaching consequences for everyone in the eurozone," he commented. Indeed, Mr Gaywood said the election has effectively become a referendum on Greece's financial future and whether it retains the euro or "goes it alone with the drachma".
He warned that if the country is thrown out of the single European currency, it would not be able to obtain any additional support from the European Central Bank.
As a result, a run on Greece's banks could ensue, which Mr Gaywood said may precipitate a similar situation in Portugal, Ireland, Spain and potentially Italy.
He warned that the resulting impact on countries such as France, Germany and the UK would result in global trade being "paralysed as credit concerns would strangle critical trade with the Far East, the US and South America".