This is the view held by Ray Boulger, senior technical director at London-based John Charcol.
Earlier this week European leaders reached an agreement in principle that would see banks holding Greek debt accepting a 50% writedown, a £880bn reinforcement of the European Financial Stability Fund, and an agreement that banks must also raise more capital to protect them against any future government defaults.
Boulger said the measures exceeded market expectations but he remained sceptical on whether the plan would deliver.
He said: “I don’t think the agreement changes very much but it probably buys us a bit more time. The important factor is what impact this will have on wholesale funds.
“Unless the markets are confident that the money being put in to recapitalise the banks is going to be sufficient, we’re still going to have this problem in that the eurozone banks still don’t trust each other.
“A key thing to watch over the next week or two is whether the overnight borrowing and lending to the European Central Bank will continue at the same sort of levels.”
Meanwhile Mark Burgess, chief investment officer at Threadneedle Investments, warned that UK banks would be likely to continue deleveraging next year which will keep the brakes on mortgage lending.
He said: “What has not changed is that the outlook for developed market growth is as challenged as ever. Europe will struggle to avoid recession next year, and the US will grow at less than 2%.
“Deleveraging will continue to provide a growth headwind as banks raise further capital and restrict lending.”
Ian McCafferty, CBI chief economic adviser, was slightly more positive on the deal but agreed that the proof would be in the pudding.
He said: “Businesses will be relieved by the announcement of what appears to be a more credible package of solutions to the eurozone debt crisis.
“Clearly a lot of work still needs to be done on the detail, but it does now appear that European leaders are united in their attempts to tackle the problems.”
