Greece's million-drachma question

published 2 July 2015

15-7-2-Greece-634 — Greek banks shut down to prevent collapse

A Greek exit from the euro is looking increasingly likely. It would be the first reversal for European integration since 1945. Endless twists and turns further frayed investors' nerves. The Greek government called a referendum for 5 July on the terms of an extension to the EU/IMF rescue package that expired at the end of June. Banks were shut to prevent a collapse of the financial system after mass withdrawals; locals are limited to taking €60 a day out of cash machines.

The terms of the rescue package have officially expired, it is uncertain whether they can be offered again, and eurozone leaders have said that they consider a "No" vote to mean a Grexit. Rattled Greek premier, Alexis Tsipras, made a request for new loans, which was rebuffed, then went on Greek television to urge a "no" vote, denying it would mean a "rupture" with Europe.

Germany said there would be no talks pre-referendum. On Tuesday night, Greece missed a €1.6bn payment to the IMF, becoming the first developed country ever to default on an IMF loan. Market jitters have sent the FTSE 100 into the red for the year. The pound hit an eight-year high against the euro.

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What the commentators said

But for now the polls point to a clear majority saying "No" to more austerity. Still, said economist.com, the gap is closing as "banks remain closed and fear of a doomsday scenario builds". Whether enough Greeks join the "Yes" ranks before Sunday to keep it in the eurozone "is the million-drachma question".

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.