Despite the downgrade of Greece’s credit rating to the lowest in the Eurozone, the country won’t default on its debt, says hedge fund legend George Soros.
In an interview with Sky Television, he said the U.K., whose credit rating may be at risk, and Dubai, which is suffering a financial crisis, won’t default either.
"There has to be pressure on Greece to put its house in order but I'm sure that Greece will not be allowed to default. The same applies to the U.K.,” Soros said.
"Debt has mounted and you can't have a 13 percent or 14 percent deficit – you do have to cut it. That puts a constraint on the amount of stimulus that can be provided."
Greece’s deficit totals 13 percent of GDP. Fitch Ratings cut Greece's debt rating to BBB+ with a negative outlook. That marks the first time in 10 years that a major ratings agency has ranked Greece below A.
Default concerns sprang up after Dubai’s investment arm, Dubai World, began negotiations to restructure $26 billion of its debt.
"There is a danger of sovereign defaults, but it is a rather remote one," Soros said. "Dubai shook the world for a day because it raised the spectre of sovereign defaults."
Others are more worried about Greece than Soros. "The Greek problem will be an acid test for the currency union," a senior German government official told German magazine Der Spiegel.
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