Forex focus: goodbye to Greece? Chief economist Jeremy Cook of World First is unequivocal, saying: "The future for Greece is outside the eurozone; it never should have been part of it in the first place." Alistair Cotton, corporate dealer at Currencies Direct says: "The Greek people will not put up with the prospect of indefinite austerity and there will come a point when Germany will refuse to accept indefinite liabilities. A combination of political overhaul and a push (or lack of resistance) from Germany will force the Greeks from the euro. The last time this was mooted economists predicted an Armageddon scenario with markets crashing round the world, but the idea is not so horrific now. As Chris Towner, director of dealing services at HiFX, explains: "The market has had time to prepare for a Greek exit as long as it is not a disorderly one. A seismic shift would be if there was a rebellion from the core...what if Germany fell out of love with the idea of being the rich distant cousin who is continuously tapped for money? Charles Purdy, managing director of Smart Currency Exchange, agrees: "Common sense says that the Greek economy will take years to recover and that they will be unable to pay their way. As a result they will leave the eurozone but it will be done in a controlled and hopefully measured way rather than as a result of a debt default. A far bigger problem will be if this leads to other troubled eurozone nations walking - or being pushed - out of the door. Portugal, Italy and Spain are all in the cross hairs. Portugal "They are in a similar position to the Hellenic Republic, needing to internally devalue to regain competitiveness in relation to Germany," says Cotton. The financial situation is not as bad as Greece, but the sheer size and scope of the adjustments needed by Portugal without their own currency to help them means Portugal leaving is still probably the best course of action. David Kerns, senior dealing manager for Moneycorp believes: "Portugal and Spain both owe the European Central Bank (ECB) a debt of gratitude as the refinancing operation they implemented late last year has served to stabilise their ailing bond markets, providing them with a small nugget of positive news to cling to. However, both face similar problems to their euro neighbours, as unemployment remains high and it is difficult to ascertain where an increase in economic output is likely to occur. Greece was the spur that made the diverse interests within the eurozone pull together to sort out troubled nations" borrowing difficulties, but Italy isn't out of the woods yet. "Italy remains a different kettle of fish and one of the two reasons that the Greeks have not been allowed to default as yet," says Cotton. Getting bank balance sheets in order was key, but equally important was getting the Italian budget shipshape to pre-empt the market immediately rounding on Italy. If needs be the ECB will buy as many Italian bonds as necessary to keep yields suppressed and confidence stable, despite the objections from Germany. Italy is simply too big to fail. Economists have likened the central bank's action to quantitative easing by the backdoor. The effect is similar with more money and more credit becoming available. "Saying the Italian situation is over is a very dangerous thing to do but it has calmed dramatically in the past month or so," says Cook. Mario Monti's technocratic rule has gone a lot better than that of Lucas Papademos in Greece and Italy has been the largest benefactor of help via the ECB's bond buying programme. Spain Spain, like Italy, has been dubbed too big to fail and too big to bail. As Towner points out: "Spain has a slightly different crisis. Its debt to GDP ratio when compared internationally is low, but with unemployment above 20 per cent and a crumbling property market, the foundations to a severe crisis are being built. The only way out is to grow out of the problem. Meanwhile, the UK was given a negative outlook by credit ratings agency Moody's on Tuesday. Suddenly, our coveted triple-A rating is looking shaky. The warning note means the UK has a 30 per cent chance of losing its AAA rating within the next 18 months. So what does this all mean for the euro-sterling exchange rate? Daniel Abrahams of MyCurrencyTransfer.com comments: ""Although the euro rallied on Monday following painful austerity measures in Greece being passed, we believe this is only a short term positive for the single currency and no cause for euphoria for the eurozone." In fact, this rally had little impact on sterling, as it was mainly confined to the Asian markets. Purdy is even more definite: "I am sure we will have our periods of respite but the markets still expect the euro to weaken across the board and common sense says that this is correct, it is just a matter of time."