Greece ‘could leave eurozone’ on Brexit vote
Greece could crash out of the eurozone as early as this summer if Britons vote to leave the European Union in the upcoming referendum, economists have predicted.
The uncertainty following a ‘yes’ vote to Britain leaving the EU would put unsustainable pressure on Greece’s cash-strapped economy at a time when it is also struggling to cope with an influx of migrants escaping turmoil in the Middle East and Africa, according to a report from the Economist Intelligence Unit.
The authors of the report say it is highly likely that Greece will be forced to leave the eurozone at some point within the next five years, but that if the UK votes to leave the EU in June, it could happen much sooner.
Greece is already under a huge amount of pressure and a so-called Brexit could tip it over the edge. The country has large debt payments due in mid-2016, while structural reforms recommended in Greece’s bail-out programme are “slow burners” and unlikely to deliver any significant growth in the short term.
Greece’s true GDP contracted by 0.3pc last year, while unemployment stands at 24pc. The country’s overall debt-to-GDP ratio has hit 171pc.
“While the region could probably handle a Brexit, Grexit or an escalation of the migrant crisis individually, it would be unlikely to navigate successfully a situation in which several of those crises came to a head simultaneously,” the report, entitled ‘Europe stretched to the limit’, said.
“It is not impossible that this could happen as early as mid-2016, when the UK votes on whether or not to remain in the EU.”
The wave of migrants turning up on Greece’s shores is putting sustained pressure on the economy.
At its peak in October 2015, more than 200,000 migrants were arriving in Greece each month.
Since then, European officials have taken steps to slow the tide of migrants into the bloc, although critics doubt whether their plans will work in the long-run.
Controversial plans introduced earlier this month mean that migrants who arrive illegally for economic reasons are transported back to Turkey, and then sent back to their country of origin. Registered refugees are accepted into the EU.
“We expect the Greek government to encounter serious difficulties in accommodating the migrants, processing their asylum claims and returning them to Turkey,” the report said.
“All of this is happening at a time when the Greek government is once again at loggerheads with its international creditors over the terms of its latest bail-out deal ahead of a large bond repayment that is due in July. The risk of Greece suffering yet another lurch into crisis is significant.”
The report argued that the likelihood of Britain leaving the EU had increased in recent weeks, mainly due to a string of PR disasters for the Prime Minister, David Cameron, who is backing the ‘remain’ campaign. However, the authors concluded that Britons will ultimately vote to stay in, rather than risk the “uncertain economic consequences” of leaving the EU.