Britain braced for meltdown in the eurozone, says Hague as he compares crisis to stricken Italian cruise ship…

Posted: January 19, 2012 in Money, People, Politics, World
Dire warning: Foreign Minister William Hague predicted fresh disaster as France was stripped of its Triple A credit ratingDire warning: Foreign Minister William Hague predicted fresh disaster as France was stripped of its Triple A credit rating

William Hague said yesterday that Britain was braced for fresh disasters in the eurozone as markets looked set to plunge after France was stripped of its coveted Triple A credit rating.

The Foreign Secretary said the Government had devised contingency plans  to evacuate British citizens from Europe in the event of financial meltdown.

He compared the plans to those used to bring home Britons who had been on the stricken cruise ship Costa Concordia.

He spoke out as experts warned Greece was set to default on its debts in March unless another bailout was organised.

Markets reopen today for the first time since the humiliating downgrade of French debt, announced by rating agency Standard & Poor’s after dealing floors had closed on Friday.

In addition to marking down France, S&P also demoted Italy, Spain, Austria and five other eurozone countries.

 Mr Hague said: ‘This is serious, it underlines the fact that the eurozone is not through its problems.’

Asked about reports that the UK is preparing to evacuate Britons from the Continent if the single currency goes down, the Foreign Secretary said: ‘Well we have contingency plans in the Foreign Office for a very wide range of eventualities; it’s because of that we were able to respond quickly to something like the cruise liner disaster that we’ve seen in the last couple of days…

‘So yes, we do have contingency plans for a variety of events that may happen in the eurozone over the coming months.’

Sinking fast: Mr Hague compared Europe's economy to the doomed cruise liner Costa ConcordiaSinking fast: Mr Hague compared Europe’s economy to the doomed cruise liner Costa Concordia

Experts said there may not be an immediate bloodbath in trading rooms as the downgrades had been expected for several weeks, but that the dire state of the eurozone is still menacing stock markets.

Gerald Moser, equity strategist at Goldman Sachs, said European stocks may drop as much as 10 per cent due to concerns the sovereign debt crisis will hit European economies, but that they will recover in the second half of this year.

The debt downgrades throw fresh doubt on the ability of the eurozone’s bailout fund, the European Financial Stability Facility, to rescue troubled nations.

This is a test and since it is, we have to confront it, we have to resist, we have to fight.

The EFSF’s own credit standing has been put in jeopardy by the blow to the creditworthiness of France and Austria, two of its main backers.

If the EFSF is shorn of its Triple A rating, it will be more expensive for it to borrow.

Chancellor George Osborne last night called on European leaders to do more to tackle their problems at a summit in Brussels later this month.

Speaking in China last night, he said: ‘All European economies need to tackle the structural obstacles to growth that we’ve simply not had the political will to address in recent years.’ But eurozone leaders appeared to be in denial about the scale of the problem.

French President Nicolas Sarkozy sought to downplay the crisis in a speech yesterday, failing even to mention his country’s downgrade.

‘This is a test and since it is, we have to confront it, we have to resist, we have to fight,’ Mr Sarkozy said.

‘We have to demonstrate courage, we have to demonstrate calm.’

Francois Fillon, the French prime minister, said the downgrade should not be ‘dramatised’.

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