By Bagehot
FOR this week’s print edition, a colleague from our economics team did some number crunching around Britain’s exposure to the troubled euro-zone periphery. His sobering finding: add up the value of the loans extended by British banks to businesses, banks and public treasuries in Ireland, Spain, Portugal, Italy and Greece, and you get to a sum that is the equivalent of nearly 15% of British GDP. Or to put it another way, Britain is more exposed to the euro-zone periphery than Germany, when loan values are measured against each country’s respective GDP (though France is way ahead of either, with its banks exposed to the tune of $680 billion, equivalent to almost a quarter of French national output). Before British readers heave a sigh of relief at not being French, they should consider that British banks lent a further $210 billion to French and German banks, which promptly lent some of that on to Italy and the others.
