tutor2u | Update on the Greek Economic Crisis

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Update on the Greek Economic Crisis

Graham Watson

8th February 2017

Dear, oh dear. It seems that Greece is the issue that won't go away, unsurprisingly, since it was never really resolved in the first place. Greek bond yields are up, and there are fears about its capacity to meet current debt repayments.

Statistic: Greece: National debt in relation to gross domestic product (GDP) from 2010 to 2020 | Statista
Find more statistics at Statista

Equally, Germany has made it plain that any future bail out will require IMF involvement and that seems less than straightforward, with the IMF board split over whether or not Greece has made enough progress towards fiscal and debt sustainability.

Greece now runs a primary budget surplus of 1.5% of her GDP - but the terms of the 2015 bail out require this to be 3.5% of GDP. Has austerity go so far that it is having a permanently damaging effect on the competitiveness, capacity and (ultimately) the tax raising capability of the Greek economy?

A primary fiscal surplus refers to a government’s tax revenues exceeding its spending, excluding debt interest payments.

Statistic: Yield on ten-year government bonds of selected countries worldwide as of January 2017 | Statista
Find more statistics at Statista

The BBC here gives a brief synopsis of the state of play in Greece: it's a nice entry level account of the general confusion regarding Greek public finances, the need for austerity and the prospects for another bailout

Eurozone back in crisis over Greece

The FT summarises the ongoing Greek crisis and the future of the debt programme, and bailout. As if there's not enough uncertainty.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.


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