City panel says Greece will default within the next year
VOICE OF THE CITY
AN overwhelming majority of our Voice of the City Panel, run in association with Politics Home, thinks that Greece will default on its debt within the next year. But less than a third believe that the UK should have a role in international efforts to prop up the Greek economy, with 70 per cent opposed to any UK contribution to an bailout fund.
Eighty-six per cent of our panellists – drawn exclusively from the City’s business community – see Greece as likely to default on its debt before next summer, with just eight per cent optimistic about the country’s ability to keep up repayments.
The City panel also seems firmly aligned with Prime Minister David Cameron’s efforts to limit the UK’s contribution to a Greek bailout.
Though the coalition leader won support from German chancellor Angela Merkel last week for his efforts to oppose any British contribution to a further €120bn bailout for Greece, majority voting means that Cameron’s veto would have little effect on the final deal.
Our panel was also pessimistic about Greece’s future as a member of the single currency, with more than 70 per cent of the opinion that Greece will leave the euro before 2014.
“The only sustainable future for Greece is for it to default, exit the Euro, and re-baseline its economy,” said one respondent.
“Renewed bailouts will only bind its nation’s future generations to years of foreign debt and lack of domestic-led growth.”
A study by economic consultancy Cebr last week predicted that stunted growth prospects for certain Eurozone members would see the current make-up of the single currency broken up by 2013 – with Greece’s outlook for growth as part of the euro from 2011-15 forecast at a dismal -0.5 per cent.
Greek Prime Minister George Papandreou dismissed suggestions that his country could leave the euro at the beginning of this moth as he unveiled a report on climate change in which “all the calculations on the cost-benefit analysis contained in the report are in euros”, and called suggestions of a return to the drachma “improbable and ridiculous”.
Away from the immmediate Greek crisis, just over half of our panellists (54 per cent) predicted that another country would leave the euro within the next three years, with just 35 per cent seeing another departure as unlikely.
“The euro experiment has failed by overstretching its reach,” said one panellist.
“It seems the Eurozone will need to contract substantially if it is to survive.”