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Andrew Goodwin of Oxford Economics has warned Forex traders that the problems with sovereign debt "do pose a risk to [a] European recovery".
Greece, along with Span and Portugal, has seen its credit rating downgraded and Mr Goodwin said confidence in the markets will be damaged if uncertainty continues to surround the issue.
This "could potentially result in further wealth losses and higher borrowing costs", he noted.
Standard & Poor's moved Greece's debt to 'junk' on April 27th and moved Spain's credit rating from AA+ to AA a day later.
And Mr Goodwin concluded by stating the damage that would be caused by Greece defaulting on its loans would be "considerably greater than the costs of a bailout".
He was commenting after Oxford Economics conducted an investigation into Greece's problems and the potential impact, which found a "long period of fiscal indiscipline" to be the reason behind the financial troubles.
Posted by Greg Secker
