The FTSE 100 opened with a drop this morning falling more than 2.5 per cent from 5,069 to 4,938 amid fears that the Eurozone crisis will cause more turmoil in the financial sector.
But, the UK remains in a better position for recovery than our Eurozone neighbours, leading fund managers claim.
A survey from Fidelity FundsNetwork, of fund provider views on the Eurozone crisis has revealed that the general consensus is that, as the Greek fiscal crisis deepens, the UK is in a much stronger position than other countries in the Eurozone.
Commenting, Ed Dymott, head of UK fund partners at Fidelity International said: "Our survey suggests that much of the market believes that the recent issues in Greece are likely to spread, but how quickly and how far is still in question. There was certainly mixed views from the fund managers we interviewed on the attractiveness of European investments in the short term."
Commenting on whether the Greek crisis looks set to be contagious, James Foster, manager of Artemis Strategic Bond said: "It depends. The almost $1trillion package thrown at the overall problem certainly shows that the Europeans are serious about containing, and then resolving, the indebtedness.
"What the bond and currency markets need is deeds, not just words. The crisis could prove contagious – and that's why markets are still very nervous – unless governments of Greece (and Spain, Portugal and the UK) deliver on their 'austerity plans'."
But the crisis may not be all bad, Max King, Fund Manager, Multi Asset Team, Investec, said: "Ultimately, a resolution of the euro crisis will be positive: a fall in the euro will stimulate growth and the fiscal problems in Southern Europe are insoluble without devaluation and a restructuring a debt. As with the collapse of the Soviet block, a collapse in the euro block would be disruptive in the short term but pave the way for solvency and prosperity in the future. With the exception of Greece, Southern European countries plus Ireland are far better managed now that before they entered the euro: they will not revert to the bad old ways when they leave. The growing instability of the Eurozone is a reason for cautious valuations, not for avoiding risk assets."
© Fair Investment Company Ltd