The collapse of Italy or Spain could spell the end for the single currency bloc in its current form.
It is feared that the two countries could be the next to suffer in the crisis that has already engulfed Greece, Portugal and Ireland.
Shares around the world tumbled, but at the same time, investors snapped up British government debt, gambling that it is a safer bet than other investments.
The UK Treasury claimed the situation vindicated George Osborne’s tough stance on the deficit amid worries about towering debts in the U.S. and the eurozone.
A Treasury spokesman said: “By taking difficult decisions to deal with our debts, Britain has been a safe haven during recent international storms.
“This is helping keep down the costs of borrowing for British businesses and homeowners, and is essential for growth.”
Will all this unrest help to revive our property market, as domestic confidence in the UK economy rises and overseas investors turn their attention to the UK property market?
I think the London property market would be the first to see the signs of an increase in international investors. Other cities could also benefit in time.
The London market is feeling the squeeze right now, with average prices dipping by 0.1% in June, the second month in a row in that they have fallen.
London prices remain just above water with a 0.8% annual increase, but all other regions are seeing a year-on-year decline, according to the Land Registry.
At the top end of the London market, supply is limited and demand is holding up well. With the pound relatively cheap, wealthy international buyers are rumoured to be getting their cheque books out already for property in the most desirable areas. This is steadily driving prices up and prime properties are moving.
So, the latest developments in the US and parts of Europe could work in our favour.
It’s a far cry from the doom mongering earlier in the year when Britain was seen as being the European poor relation in terms of economic recovery.
It might actually be our turn for some good luck at last. I’ll drink to that as I enjoy the great British sunshine over the next few weeks.
Sally Laker is managing director, Mortgage Intelligence Holdings
