6th Week Post on Economics News about the UK

Original Article: http://www.nytimes.com/2012/05/18/business/global/chance-of-greece-exiting-euro-grows.html?pagewanted=all

A possible Greek exit from the Euro Zone has recently raised international alarm to the well-being of the Euro Zone financial system. It has been observed that if Greece departs from the Euro Zone, the international fear on whether Europe will survive the crisis as a whole will once again be aggravated. It can be expected that investment in the Europe will decline; depositors will withdraw their money from the European firms and banks. The most direct result will be a significantly weaker currency. International trades will be influenced as a result of the change in capital flows. For United Kingdom, a stronger GBP will decrease British exports and increases imports from Europe, since the British goods have become relatively expensive and European goods relatively cheap. Thus, the net export sector in the UK GDP will decline. Given that the Euro Zone is one of the biggest trading parties with the UK, this financial turmoil in Europe is expected to exert significantly negative effect on the British economy.