There are now worries about Italy, as their banks stocks were suspended on Friday following a steep drop in their share prices. There are also concerns that Italian banks face possible ratings downgrades.
The Duetsche Bank said: “The recent weakness has put Italy's structural problem in focus. This situation is so unique that to say that Spain, Italy and even other seemingly 'safer' countries will avoid the sovereign crisis might just be hopeful given we've never been here before. No-one has a template for such an environment.”
Despite supporting last weeks successful vote of confidence that will help in terms of support for their austerity measure, David Cameron insist that British taxpayers should not contribute to the bailout beyond their £1bn share from the IMF.
He said: 'Britain suffers when the eurozone struggles. Forty per cent of our exports go to eurozone countries. Turbulence in the eurozone is not good for Britain.'
Ministers had reportedly claimed that British banks only had £2.5bn of exposure to Greek government debt, while the Bank of England said that the potential losses would be £8bn.
This average was dispelled by experts who said the UK financial institutions are in more danger than previously thought because of banks being tied up in complex derivatives and insurance deals. Furthermore, ministers have been accused by experts of underestimating the true scale of risk as the debt crisis could potentially cost the UK £336bn, roughly £14,640 per family.
London-based think tank Open Europe reportedly said that a new bail-out would almost triple taxpayers’ exposure to the Greek debt.
While the Greek Prime Minister George Papandreou will be relieved with his win, there are others that are sceptical of what is yet to come for the troubled country.
Mohamed El-Erian, the chief executive of Pimco, the world’s biggest bond fund, believes that in order to resolve their problems, Greece and other economies will have to default on their debts.
“Nothing has been done to enhance growth. No single (Greek) indicator has shown strength. They are afraid a restructuring would hurt European banks,” he explained.
In regards to fears that a Greek default will trigger another global crisis, El-Erian insisted that other countries such as Ireland, Spain, Portugal and Italy would have be involved too.
“For the next three years, we're going to see different economies work out different problems. For European economies, especially Greece, it would be through default."
After winning the critical confidence vote, the Greek government will now have to persuade MPs to support £25bn (€28bn) of cuts, tax rises and privatisation plans.
Alistair Darling declared that the strongest economies in the eurozone need to do more to help Greece rather than approach the issue with a “patch and mend” mentality. His comments come after Jack Straw predicted the collapse of the euro as he said that the eurozone could continue treating “Greece, Portugal and Ireland as bad boys” or have “the stronger parts of the economy help the weaker parts to make the reforms they need.”
The Chinese Foreign Ministry has been taking proactive measures to try and help by pushing Sino-Europe trade and buying euro bonds.