The Eurozone crisis – waiting for the axe to fall

The Eurozone crisis continues to dominate the economic backdrop. The main focus over that past week has been the situation in Greece but other countries in the Eurozone such as Spain are beginning to come more under the spotlight.

The latest development has seen US credit ratings agency Moody’s downgraded the long-term debt and deposit ratings for 26 Italian banks this week, citing the country’s recession and rising bad debt levels. Ratings agency Moody's has cut the credit ratings of 16 Spanish banks, a further blow to a country that is struggling to deal with the bad debts of its banking sector.

It also cut the debt rating on Santander UK, a subsidiary of the Spanish banking giant.

It comes after shares in struggling lender Bankia fell another 14%. They have almost halved in value this month.

As governments wrestle with their respective debt burdens the only certainty is there is no silver bullet.

The all pervading sense of nervousness will continue to impact on all business sectors. The days of easy access to finance are long gone. Companies need to focus on their exposure at every level ranging from inventory levels, rate of stock turn and the integrity of the debtor’s book.

Operating in this current climate of austerity will provide the ultimate challenge for those managing companies, be it an SME or a large multi-national corporation.