Ph
ilippa Latimer, Public Affairs Manager at BCSC takes a look at the Greek sovereign debt crisis, and what it could mean for retail development in the UK
My walk to work, ordinarily a fairly mundane progress from North London's Primrose HIll down to Westminster, was today disturbed by a poster for the Titanic Exhibition. Not offensive in itself you might think, but suddenly finding myself humming Celine Dion's My Heart Will Go On for the rest of the journey, whilst contemplating images of the captain clinging to his sinking ship wasn't the best start to the day.
As I wandered down to Piccadilly, the tune mingled - perhaps subconsciously prompted by the increased number of (fair weather) Boris bikers - with the Mayor's recent comments on Greece - currently also struggling above a sea of debt. As Mayor, Boris' decision last week to shout "Pull the Plug" on the Greek fiasco, was an intriguing one. Not only did he speak out against the party/coalition (it'll be alright on the night) line, but he also did so in a way that may have antagonised some of his own city backers - a brave move as we enter an election year. It's a bit like Fight Club; the first rule of the Greek debt crisis is - shhhh, there's nothing to see here.
At the European Union leaders' summit in Brussels, the Prime Minister, perhaps jolted into action by the remarks of his childhood nemesis, finally had something to say on the Grecian plight noting, "We have to strengthen banks and bank balance sheets and make sure they are meeting all of the requirements so that they are strong and can withstand any problems and difficulties... Banks right across Europe that have exposure to Greece... every bank needs to make absolutely clear what that exposure is."
Now, you can call me a pessimist, but those remarks don't sound like the words of a PM convinced that the Eurozone is unsinkable, and certain that the Greek crisis is soon going to be over, irrespective of yesterday's vote. They sound very much like the words of a man, desperately hoping that somebody somewhere is going to find some cash to pop in the piggy bank so that when it smashes to the floor nobody will realise it has been empty all along.
And, what of his "every bank needs to make absolutely clear what its exposure is"? I may be a cynic, but isn't this a bit late in the day? The Greek debt crisis has been going on for months - months and months. Plus, as the PM is well aware, that data, however incomplete, is already in the public domain. Just look at the Guardian's recent report on the matter, its interactivity only making it all the more eye-watering: in the UK, RBS has €1bn exposure, HSBC €800m, Barclays €350m. Germany's banks have an exposure of over €7bn and France's a staggering €9bn. Looking at the numbers, the politics begin to take on a whole new resonance. No wonder Merkel and Sarkozy are so keen to keep this show on the road.
Look again at that list. Those are some of the banking industry's biggest players. I have to be honest; I am coming round to the Boris way of thinking. However hard it is to stomach, this show - unlike Dion's heart - simply will not go on. As Cameron stated, yes - the banks certainly do need to strengthen to "withstand any problems and difficulties". But, crucially, it must be about time that we all (including colleagues in retail property) faced up to what those "problems and difficulties" are going to look like. Will they be big problems or manageable ones? Will the Chancellor need to inject further funds into the banks and plug the gap left by Greek debt payments? If so, how much? And, how will we, good old UK PLC, be able to afford it? Tax rises? Cuts? What kind of impact will this have on our markets, our consumers, their retail spends, the retailers' ability to pay rent? So many questions, any answers?
When Greece defaults billions and billions of euros are going to be sucked from the European economy. When the banks (again) have millions/ billions wiped off their balance sheets, we have a duty to ask, how much money do we really believe will be available to fund retail developments and investments in the UK? We can't continue to ignore this Grecian iceberg.
