Business World

Saturday 16 December 2017

Greece likely to default but will remain in the eurozone - economists

Philip Pilkington

Greece is more than likely to default on its sovereign debt but will remain in the single currency union, a Reuters poll of over 50 European economists has shown.

Economists gave a 65pc chance that Greece would default on its debt, while half of the respondents expected this default to take place this year.

The economists only gave an 18pc chance of Greece leaving the currency, however.

Despite the entrenched opposition currently in place against the proposal of a European-wide bond or 'eurobond', the economists still seemed to consider this a viable option giving it a 40pc chance of seeing the light of day.

Some of the economists said that the extension of liquidity was an absolute necessity to prevent a default.

"In the absence of measures to ensure ongoing supply of liquidity to Greece, a debt default may be the only way to lance the boil which is building up in the markets," said Peter Dixon, economist at Commerzbank in London.

Mr. Dixon gave a 90pc chance that the Greek government would default citing a lack of options currently on the table.

His comments come after European leaders made it clear that Greece has still not persuaded them that it has undertaken sufficient action to merit receiving the next tranche of the bailout this October and they will not find out whether they will receive it until close to the deadline.

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