Berlin likely to back down on Greek aid

GERMANY will probably back down in its battle with the European Central Bank over a new aid package for Greece rather than risk a breakup of the euro, said Andrew Bosomworth, a fund manager at Pacific Investment Management.

“I think in this case, Germany probably is going to come down, to back off,” Mr Bosomworth said in an interview with Deirdre Bolton on Bloomberg Television’s InsideTrack. “If it doesn’t and really insists and it sticks to its ground, then we are going to have something that looks like the early 1990s when the pound sterling and the Italian lira went out of the exchange-rate mechanism.”

While a euro breakup wasn’t part of his “base-case” scenario, Mr Bosomworth said chances were above five on scale of one to 10 that it could eventually happen if Germany doesn’t back down.