With the recent summer weather predicted to return to more typical October conditions this week, the financial markets have also provided a gloomy start to the month.
Shares across the world have fallen in value again this morning following speculation that Greece will miss its deficit reduction targets.
This is important because meeting these targets are a prerequisite for accessing further bailout funds. Without access to these funds, Greece is more likely to default on its debts.
Greece was set a deficit target by the EU and International Monetary Fund (IMF) of 7.6% of GDP in 2011. It was 10.5% in 2010 and is now expected to only reach 8.5%. They are cutting their deficit but not by enough.
It appears that Greece faces a similar problem to other nations, including the UK; struggling to balance austerity with economic growth. Without sufficient growth in the economy, it becomes more difficult to reduce a budget deficit. For this reason, deficits cannot be slashed through austerity alone.
Stock markets now appear to be pricing in a restructuring of Greek debt in the near future, rather than the full bankruptcy which would occur if Greece did not receive the next £6.9bn instalment of bailout funds next month.
The gloomy mood continues with the latest Pricewaterhouse Coopers and CBI survey for the finance sector, which found that it experienced its slowest growth since June 2010 over the three months to the end of September.
They also forecast a further slowdown in activity during the final quarter of the year and an expectation for no improvement in profitability.
Firms in the finance sector are expected to shed 8,000 jobs over the next three months in response to this slow growth.
Much like the weather, we hope that this gloomy start to the month is only temporary and that better news will motivate the markets over the coming months and years.
Photo credit: Flickr/Zach Dischner
