LONDON, UNITED KINGDOM--(Marketwire - Aug. 2, 2012) - Last week, ratings agency, Standard and Poor's, dealt a fresh blow to Spain's ailing banking sector by downgrading the credit ratings of five leading Spanish banks, reports currency exchange experts, Currencies Direct. Economists believe these cuts reflect the heightened risk of investors suffering huge losses if property loans - the leading cause of Spain's economic plight - cannot be repaid.
Whether the threat of financial loss is as substantial as economists predict, many British expatriates living in Spain are not taking the risk; seeking an immediate escape route out of the economic turmoil and mitigating depreciating exchange rates which threaten to affect potential savings. According to recent figures, more than one in three British-owned properties in Spain is now up for sale.
However, it's not all doom and gloom. According to Currencies Direct, as with any currency fluctuation, the potential for investment isn't likely to diminish entirely as a result of the euro's rapid depreciation [against sterling].
For those with strong nerves this may actually be the time to buy property in the euro zone: the market is saturated with affordable houses, villas and apartments and owners are desperate to sell.
But what about as a longer term investment? Surely buying a property now will only threaten potential returns?
Of course any decision to buy overseas will depend on an economy's ability to generate growth and meet targets set by the EU commission. In Spain's case this means stabilising their fragile banking sector, which to the dismay of ordinary Spaniards may come in the form of austerity cuts.
However as the austerity versus growth debate continues to divide opinion amongst Europe's leaders, it's likely no plausible remedy will come to Spain's aid anytime soon.
About Currencies Direct
Currencies Direct is one of Europe's leading non-bank providers of foreign exchange payment services. Since its formation in 1996 Currencies Direct has evolved and positioned from being an innovative service provider of foreign exchange for consumers and high net worth individuals into a dynamic and pioneering 'business to business' fully integrated treasury solution service provider. Headquartered in the City of London (United Kingdom) with operations in Europe, Africa, Asia and the United States, Currencies Direct is part of the Azibo Group, a privately owned investment company.