Grexit risks highlight need for MPC to nurture recovery

The odds of Greece defaulting on its debt, and possibly exiting the euro-zone too, seem to be growing by the day. However, as we have stressed before, the UK’s direct economic and financial exposures to Greece are small. Granted, the UK would probably still suffer the effects of financial market instability in the short-term, but we doubt that a “Grexit” would bring the recovery to a halt. It does however provide the MPC with more justification to hold fire on raising interest rates.