David McWilliams: Greece gets an ultimatum from EU but there is life after the euro
Published 08/02/2012 | 05:00
Are the Germans about to give up on the Greeks? Are they about to allow the Greeks to leave the euro? It certainly feels like that. The EU has just issued an ultimatum to Greece. All the talk of a friendly deal is gone. Greek politicians say they need more time to examine the austerity attached to the release of the next tranche of the €110bn loan.
But austerity isn't working and the Greeks know it. Athens adopted the troika's strict budget targets in May 2010 -- nearly two years ago -- in return for a €110bn rescue. Last year the Greek economy shrank by 6pc and the country's budget deficit is still close to 10pc of GDP. Its current account deficit is also stuck at 10pc of GDP and anyone who could have got their money out of Greece will have done so ages ago.
With no credit, unemployment has risen to 18pc. As we pointed out in this column last week, over half of young Greeks are out of work. This can't go on. And as the great American economist Herbert Stein observed, "when something can't go on forever, it will stop".