Is a Grexit from the EU imminent?

Grexit from the EU imminent

After Greece’s five month stand-off with bailout creditors, the Bank of Greece has now opted to go against the government’s decision to refuse a deal that would force Athens out of the European Union.

According to the Financial Times, the bank has been encouraging the Greek government to accept the deal which they believe would put them at risk of an uncontrollable crisis if they left the EU.

This statement was revealed in a regular report from the bank, which marks the first time that any Greek authority has publicly acknowledged that the country may leave the EU. “The Bank of Greece firmly believes that striking an agreement with our partners is a historical imperative that we cannot afford to ignore,” the bank wrote.

Officials believe that if Greece does not agree to the reforms suggested by creditors, time will run out for Athens due to the fact that they need €7.2billion before the bailout programme expires in two weeks.

Without this amount of money, Greek leaders will be forced to default on the country’s debts which will inevitably lead to Greece exiting, or the Grexit, from the Eurozone and the EU.

Greece’s finance minister Yanis Varoufakis confirms that he does not expect to accept the deal when asked about the situation this week. “We will set the scene for what we consider to be our political and moral duty, and that is to reach an agreement very, very quickly with our partners and the institutions,” Varoufakis says.

Alexis Tsipras, prime minister of Greece, seems to be prepared to take responsibility for the refusal of the deal and continues to resist cuts to public sector pensions that the creditors are demanding, according to the FT.  “If we don’t have an honourable compromise and an economically viable solution, we will assume the responsibility to say ”the great no” to a continuation of the catastrophic policies,” Tsipras said.

This comment eliminates hope that Greek officials could be persuaded to accept the deal in conversation with other Eurozone countries in a meeting to be held this week. However, one senior Eurozone official remarked that he believes that the meeting “will be pretty short.”

722 views

Related reading

bank-of-japan
images-1
The Shard
HMRC_2525633b