Latest bailout is unlikely to be its last, as City still expects Greece to exit the euro
THE City has given a resounding thumbs down to the latest Greek bailout package, with three-quarters (74 per cent) of our Voice of the City panellists saying it is “highly unlikely” that the €130bn (£110bn) rescue package will be its last.
The finding of our most recent survey, run in association with PoliticsHome.com, suggests that business sentiment towards the bailout is overwhelmingly pessimistic, with fewer than one in 10 (eight per cent) of our panel seeing a successful resolution as either “highly” or “somewhat likely”.
Though the UK will not contribute directly to the bailout pot, it is likely to supply up to €1bn of funds through regular contributions to the International Monetary Fund, which is expected to be on the hook for €20bn.
When weighing in on how Greece should deal with its current crisis, the opinion of our panel is even more decided, with 83 per cent saying the country should default on its debt immediately and quit the single currency – and 70 per cent seeing it exiting the euro as a “highly” or “somewhat likely” result of its economic woes.
Just 16 per cent feel Greece would be better off staying in the euro, with a slightly higher number – 21 per cent – saying it is either “somewhat” or “highly unlikely” that this will be the outcome.
Despite Greek leaders promising to implement an extra €325m in cuts – and agreeing to constant supervision from Eurogroup members to oversee reforms – our panellists remain sceptical that the country’s flailing economy can return to growth in the near future, with less than 50 per cent of respondents expecting growth before 2020.
Just one per cent see some growth within the next 18 months, while the largest proportion of those surveyed (23 per cent) do not expect economic expansion until 2022 or later.
The City was also uncompromising on Greek debt levels, with panellists insisting debt must fall to 100 per cent of GDP or less in order to be “sustainable”.