Greek deal edges closer

Finance ministers today moved closer to approving Greece’s bailout package, which will enable the refinancing of debt and stability for the Euro, for now at least.

A deal would provide immediate relief to Athens and financial markets but no one is pretending it will end Greece’s problems. Figures last week showed its economy shrank 7 percent year-on-year in the last quarter of 2011, much more than expected, with further cuts likely to make matters worse.

Therefore, once the bailout is agreed, the short-term future of the single currency bloc will be secured, but some analysts are concerned about Greece’s ability to implement its tough austerity measures – so we may end up back in the same position again in a few months’ time.

For exchange rates, it is likely that the Euro could strengthen when the deal is finally agreed, giving worse exchange rates for buying Euros.

The longer term outlook is, as much as ever in recent times, very hard to predict.