Advertisement

Nearing 'Grexhaustion'

The International Monetary Fund has poured cold water on Greece's bailout negotiations with yet more bad news.

Greece's talks with creditors remained deadlocked early this week, despite combative Greek finance minister Yanis Varoufakis reportedly being sidelined. The International Monetary Fund (IMF) piled on the pressure by saying Greece's economy was so far off track on its bailout programme that it would need more drastic austerity or debt relief from European creditors.

Advertisement - Article continues below

That raised the prospect of the IMF withholding its part of the €7.2bn in bailout money that a deal is supposed to yield. Greece is on track to run a primary budget deficit (a shortfall excluding interest payments) of 1.5% of GDP this year, instead of the 3% surplus stipulated by the rescue package. Meanwhile, the European Commission slashed its 2015 Greek GDP forecast from 2.5% to 0.5%.

What the commentators said

What we know for sure, however, is that, "deal or no deal", Greece faces bankruptcy, as Holly Ellyatt put it on CNBC. Greece's debt pile of 180% of GDP is too high to grow out of and "in no shape or form" is Greece inclined to undertake reforms to unleash faster growth, said Steen Jakobsen of Saxo Bank.

It's a pity, as the ongoing stand-off has snuffed out what little growth there was, noted Mehreen Khan in The Daily Telegraph. The first year of growth since 2007 was 2014, but uncertainty over Greece's future in the eurozone has dented confidence and spending. The economy is shrinking, says BAML, and is set to undershoot the Commission's forecast with a 0.5% decline this year.

There are now the first signs of the Greek malaise dampening the eurozone recovery, said Capital Economics. The Business and Consumer survey from the European Commission has juddered to a halt after four months of climbing; the consumer confidence component has fallen for the first time since November. The data are a reminder "not to take a further strengthening of the eurozone's fledgling economic recovery for granted".

Advertisement
Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/economy/uk-economy/brexit/600739/boris-johnsons-big-brexit-plan
Brexit

Boris Johnson’s big Brexit plan

The prime minister needs to get Brexit done, and get the economy growing – particularly for first-time Tory voters. Can he manage all that while negot…
15 Jun 2020
Visit/investments/stockmarkets/european-stockmarkets/601489/european-assets-bounce-as-the-eurozones
European stockmarkets

European assets bounce as the eurozone's economy turns upwards

Both the euro and European stocks have rallied strongly in the last few days.
12 Jun 2020
Visit/economy/eu-economy/601448/margrethe-vestager-a-symbol-of-all-thats-wrong-with-the-eu
EU Economy

Margrethe Vestager: a symbol of all that’s wrong with the EU

Margrethe Vestager, the EU’s competition commissioner, wields enormous power over industry, and abuses it, says Matthew Lynn.
7 Jun 2020

Most Popular

Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/stockmarkets/601611/nasdaq-all-time-high-markets-and-the-real-economy
Stockmarkets

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020