Creditors could face huge losses in Greek euro exit
THE first polls since Greeks headed to the election on Sunday showed a dramatic rise in support for anti-bailout party Syriza yesterday, indicating the far left party would now be the biggest party if the new elections were held.
The findings saw the party’s support grow to 27.7 per cent, up from 16.78 per cent from Sunday, indicating that it could win the most seats if a second Greek election were run in June, and sending fears round markets of a possible exit from the Eurozone.
While, PASOK leader and former finance minister Evangelos Venizelos was yesterday still trying to cobble together a pro-bailout coalition to keep the country in the euro, the rise in support for Syriza’s leader Alexis Tsipras who yesterday declared the current financial agreement invalid, coupled with the current deadlock, could lead to the country leaving the Eurozone.
An exit would cost EU institutions hundreds of billions in bad debts – official loans amount to some €140bn (£112.2bn) and the European Central Bank owns tens of billions more in Greek bonds.
Citi analyst Willem Buiter said “In light of the election results in Greece, we have raised our subjective likelihood of Greek euro area exit to 50 to 75 per cent over the next 18 months, from 50 per cent before.”
Meanwhile the country’s economic collapse continued, with unemployment rising to 21.7 per cent in February, and youth unemployment hitting 53.8 per cent.
And as Greece’s woes increased, the Eurozone lost a crucial lifeline as China’s biggest sovereign wealth fund said it no longer wanted to buy European government debt.