A few days ago the Greek government was issued somewhat of a relief plan from their struggling debt woes.  European leaders were by some opinions overly gracious as they offered a comprehensive strategy for the days ahead.  The plan includes: banks which are owed Greek debt accepting a writedown equaling half the amount of debt, almost 900 billion pounds reinforcement of the European Financial Stability Fund, and an acceptance of the commitment from banks that they will raise more capital to protect them against future defaults by the government.

Jon Charcol’s Ray Boulger remarked the plan was above most expectations and believes only time will tell if the plan will deliver or not.  He remains skeptical.

Boulger commented on the agreement, saying: “I don’t think the agreement changes very much but it probably buys us a bit more time. The important factor is what impact this will have on wholesale funds.

“Unless the markets are confident that the money being put in to recapitalise the banks is going to be sufficient, we’re still going to have this problem in that the eurozone banks still don’t trust each other.

“A key thing to watch over the next week or two is whether the overnight borrowing and lending to the European Central Bank will continue at the same sort of levels.”

Mark Burgess, chief investment officer at Threadneedle Investments, commented on the recent plan, saying: “What has not changed is that the outlook for developed market growth is as challenged as ever. Europe will struggle to avoid recession next year, and the US will grow at less than 2%.

“Deleveraging will continue to provide a growth headwind as banks raise further capital and restrict lending.”