The inability of Greece to meet the required targets and the rising expectation that Greece will default has brought about a huge amount of speculation of what will happen next. The Daily Mail expects the "EU to be torn apart", the Telegraph views it as an opportunity to start again and design an EU that Britain would like to join and the Guardian warns Great Britain that this is going to hurt.The last prediction is why these developments are so important. This is because over half of Great Britain's trade is with to Europe. Economically the relationship between the EuroZone and the United Kingdom is extremely close. The attached graph further justifies the close relationship between the two economies.
Watch the following connections to get a full understanding of the issues revolving around a Greek default.
I think that it would be beneficial for Greece to leave the Euro in the long run. In the short term, yes, it would damage Greece. However, with a de-valued currency, trade with other major nations (such as the USA) would be easier and result in Greece's economy improving.
ReplyDeletealthough Greece would always be poor relative to the rest of Europe due to a lack of international competitiveness using their own currency, they would likely be more stable and would not have such a substantial current account deficit.
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