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How could Greece's euro exit affect UK consumers?

Published 18 May 2012 by

There's been much talk in the news recently about the worsening eurozone crisis. As The Guardian reports, Greece's exit from the euro now seems inevitable, with financial experts agreeing that it's a question of if rather than when.

But what do the eurozone troubles mean for the rest of us - and what impact could it have on people's finances here in the UK?

According to the Bank for International Settlements quarterly review, banks across the world, including a number of British ones, have lent Greece a combined $167.7 billion. Greece's withdrawal from the eurozone is likely to lead to banks either directly losing money or being reluctant to lend. As a result, this will make it more difficult - and more costly - for UK banks to fund loans for both individual borrowers and businesses.

When it comes to savings, the tough economic climate will be likely to force the Bank of England to keep the base rate low (most probably holding the 0.5% rate) - which in turn could have a knock-on effect on savers getting decent returns on their money.

However, Howard Archer, chief UK and European economist for analyst IHS Global Insight, said: "It is possible some banks would lift their savings rates to attract deposits."

A spokesperson for thinkbanking commented: "The current climate is already proving difficult for many people. The rising cost of living, stagnant wages and squeezed disposable incomes are all causing growing numbers of households to struggle when it comes to making ends meet and putting money into savings.

"However, although we can't predict exactly what the future will hold when it comes to our finances, there are some steps that people could take right now to improve their financial situation. The thinkmoney bank account, for example, comes with a built-in budgeting service, helping to ensure that your monthly bills are covered - which could give you greater peace of mind when it comes to your money."

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