Friday

9th Jun 2023

Greek central bank chief warns of euro exit

  • Greece's central bank says the austerity course must be maintained or the country risks exiting the euro (Photo: YoungJ523)

Greece's central bank governor said his country would have to leave the eurozone if politicians do not stick to the austerity programme after elections due to take place on 6 May.

"What is at stake is the choice between an orderly, albeit painstaking, effort to reconstruct the economy within the euro area, with the support of our partners, or a disorderly economic and social regression, taking the country several decades back, and eventually driving it out of the euro area and the European Union," George Provopoulos said in a speech on Tuesday (24 April).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Greece has signed up to a second, €130 billion loan paid mainly by other eurozone countries to reduce the country's debt and recapitalise its banks, along with a major debt restructuring agreed with private lenders.

But in return, an already austerity-weary Greek society has to stomach further spending cuts for at least another three years.

Meanwhile the economic outlook for 2012 is worse than expected. Instead of a 4.5 percent of GDP recession, the central bank on Tuesday estimated that the economy would shrink by five percent this year, Greece's fifth year of recession.

For a long time a taboo topic, Greece's euro-exit was first floated by French and German leaders last year when the former Prime Minister said he would organise a referendum on the austerity measures linked to a second bail-out.

EU officials, along with Nicolas Sarkozy and Angela Merkel, have since repeatedly said that Greece will stay in the euro and that the agreed bail-out proves eurozone countries do not want Athens to leave.

But public support for more cuts in pensions, wages, healthcare and education has vanished, with anti-EU fringe parties on the left and right of the political spectrum set to score well in the 6 May general elections.

According to recent polls, two-thirds of the Greeks say the programme must be renegotiated by the next government. Last year, a majority thought the measures were unfair but largely unavoidable no matter who was in power.

European Investment Bank

Meanwhile, the Luxembourg-based European Investment Bank has started including a new legal clause in its contracts with Greek companies allowing them to repay loans in a currency other than the euro.

An EIB spokeswoman on Monday said the move does not mean the bank believes Greece will leave the eurozone.

“The fact that a company will repay in a different currency does not mean that the currency of the country will change,” Helen Kavvadia told Associated Press.

EU commission tries to win Greek sympathy

With less than a month to elections in which Greek radical parties are set to score well, the EU commission is keen to show it has more to offer than austerity.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Opinion

The 'BlackRock exemption' has no place in the EU's due diligence directive

With the EU's Corporate Sustainability Due Diligence Directive, there's an opportunity to harness the power of investment for truly sustainable activities. But to do this, it must not allow the 'BlackRock exemption' and instead cover institutional investors and asset managers.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Latest News

  1. EU's proposed ethics body 'toothless', say campaigners
  2. Study: 90% of Spanish inflation 'driven by corporate profits'
  3. If Spanish economy is doing well, why is Sanchez poised to lose?
  4. EU lawyering for Russia: making 'good' money?
  5. The 'BlackRock exemption' has no place in the EU's due diligence directive
  6. Europeans don't see China as a rival, but weapons to Russia is a red line
  7. Cleaning workers urge Parliament: 'Europe should lead by example'
  8. Final push for EU-Mercosur deal, amid deforestation fears

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Join EUobserver

Support quality EU news

Join us