The impact of Greek debt on British pensioners
Events in Greece are coming to a head as the Prime Minister enters crunch talks with international creditors to avoid default and a potential eurozone exit. It’s being touted as a catastrophe for European economies, but how can the financial woes of a small Mediterranean country affect the finances of UK pensioners?
Other indebted nations
If Greece defaults, or if a large proportion of the country's debt is written off, other indebted eurozone countries like Portugal, Ireland and Spain will be seen as a much bigger risk for investors.
In other words, the large international financial bodies that support struggling economies will either rethink their involvement, or charge more for their loans. This would have a knock-on effect on the eurozone economy, hitting the UK hard – the eurozone is the UK's largest trading partner, buying most of our country's exports.
Written off debt
More directly, if Greece defaults, losses by eurozone governments would amount to around €302bn. Even if a deal is reached, much of the debt may be deferred or written off – a huge cost for the eurozone to absorb.
Both of these factors can quickly impact the economy, putting jobs at risk, affecting the price of the pound and reducing consumer purchasing power; but it’s the impact on financial markets that could hit pensioners hard.
The majority of UK pensions are invested in UK financial markets, and if foreign investment, international trade and the economic recovery suffer following a Greek default, share prices could fall by as much as 10%. That’s a disastrous figure for those reliant on private pensions.
If pensions or investments are your main source of income, we recommend working out how hard you’ll be hit in the worst-case scenario. Calculate whether you can afford to pay your bills and debt repayments in the event of a 10% fall and, if you think you’ll struggle, contact your creditors immediately.
If you’ve been contacted by Dukes Bailiffs and you’re struggling to meet debt demands, our advisors can help you work out an affordable repayment plan.