Eurozone crisis: Don't panic – yet... Our expert guide to the coming storm

The headlines scream of economic meltdown on the Continent – but what does it mean for you, your mortgage and your holiday?

Q. If Greece does leave the euro, what will this mean for other indebted eurozone economies?

A. Potential disaster. The great risk is that foreign investors in Spain, Ireland, Portugal and Italy will suddenly conclude that those countries are ultimately set to follow Athens through the single currency exit door. Investors might want to pull their money out before that happened. That could cause bank runs across those vulnerable countries. It could also mean the governments of Spain and Italy – whose deficits have been largely funded by their domestic banks in recent months – would not be able to raise enough money to pay their public sector workers and pensions. They would then have to apply for a bailout from the eurozone and the International Monetary Fund. Most of the eurozone is in recession. Contagion could turn recessions into depressions.

Ben Chu

Q. What will this mean for my mortgage?

A. Monthly mortgage payments will rise for millions. The euro crisis is driving up the cost of commercial borrowing, which means banks' profits will narrow. They will be forced to pass on the increase to Britain's 11.2million mortgage borrowers. However, if you're on a fixed rate, you'll be sitting pretty for the remainder of your term.

Should you leap to switch from a variable to a fixed rate now? It will mean checking all the costs of the deal – such as mortgage fees. The best deals have been withdrawn in recent days, but fixed rates are still on offer.

Simon Read

Q. Am I at risk of losing my savings and/or assets? What should I do with my savings?

A. If you have savings with a bank or building society, the first £85,000 will be protected by the Financial Services Compensation Scheme. That's a personal allowance, so couples effectively have £170,000 protected. It doesn't matter if the bank is Spanish-owned – like Santander – the savings are held by a British subsidiary and protected by the Government's safety net.

If you have more than £85,000 in savings and are worried about a bank crash, then you should spread your money into other banks or building societies. The £85,000 limit is per person, per institution.

If you have cash overseas in a European bank, you should get the same protection. However, in the event of a Greek collapse, its government may not be able to meet its commitments, as with Iceland in 2008. Then the Government stepped into to help UK savers. Would it do so again? Maybe not.

Simon Read

Q. In Spain and Greece they are talking about schools and hospitals closing. Could this happen here?

A. Even though we are in recession, the UK is in a much stronger fiscal position. The state's cost of long-term borrowing is at a record low. British sovereign debt is considered a safe asset by investors. There is, therefore, no reason why the Coalition is going to need to implement the sort of brutal cuts to public services that are being outlined in Spain and Greece. The threat to the funding of British schools and hospitals comes in the form of very weak, or even negative, GDP growth over the coming years (which a eurozone break-up would likely bring about).

Ben Chu

Q. How will the euro crisis impact on the cost of living here?

A. The crisis is actually likely to bear down on prices, as it is pushing up the value of sterling, making imports cheaper. It is also undermining global demand. This should suppress global oil and gas prices, making energy bills cheaper. This benefit may be swamped by other negative effects, such as higher unemployment.

Ben Chu

Q. Should I avoid Greece and other eurozone countries?

A. No. On the contrary, you should make the most of the strength of sterling and holiday in the eurozone. In particular, it is an excellent time to travel to Greece. Because of the political uncertainty, the number of tourists has fallen. This has the advantage of cutting prices for package holidays: fly from Gatwick to Corfu a week today and you will pay just £153 per person for a week in two-star accommodation. Booking a proper package also has the benefit of making the tour operator responsible for your wellbeing.

Simon Calder

Q. Does the crisis mean a further blow to my pension?

A. Yes. Pension funds tend to invest in stock markets for long-term returns. Most funds will have taken a knock in the last few days. However, the potential boost to government bonds – gilts – may shore up some funds. Now may be the time to consider your investment options.

Simon Read

Q. I've already booked a holiday to Greece. Can I cancel?

A. No. Anyone who booked before the current crisis who wants to cancel has little chance of a refund. Airlines/holiday companies may allow you to switch destination, but this is likely to be expensive.

Simon Calder

Q. If I go, what should I do about money?

A. Cash is king. Take a credit or debit card if you like, but do not rely upon it. Increasingly traders are accepting only euro notes and coins, and in the event of Greece leaving the euro while you are there, it is likely that all electronic payment systems will freeze. Work out your likely spending, add a bit for contingencies, and buy that amount. The best rates are likely to be via specialist bureaux de change; see independent.co.uk/eurocash.

Insist on low-denomination notes – €5, €10 and €20 – to avoid the chance of receiving large quantities of "funny money" in change.

Simon Calder

Q. If Greece does leave the euro, what will this mean for Britain?

A. Bad news. British banks do not have much exposure to Greece but they do have massive exposure to Ireland, Spain and Italy and these countries could be disastrously destabilised. Our banks could find their sources of financing drying up. They would then hike interest rates. The disruption caused by a disorderly Greek exit would destroy business confidence in our eurozone trading partners. This would undermine our export and manufacturing sectors, potentially extending our own recession.

Ben Chu

Q. Should I be hoping for Greece to leave the euro – or to stay in?

A. You should be hoping that Greece gets the help it needs to deal with its catastrophic legacy of financial mismanagement, regardless of whether or not it stays in the eurozone. Much more important is the question of whether Europe's leaders (Germany above all) do what it takes to stop the rest of the eurozone breaking apart.

Ben Chu