Open Europe raises risk of Grexit to 40%
Ahead of yesterday’s crucial meeting of Eurozone finance ministers,
Open Europe raised its forecast for the possibility of Grexit to 40% – up from its 25% forecast at the peak of the Greek crisis in 2012. The increase was based on the expectation that the meeting would yield little result and that the two sides have a significant divide to bridge if any kind of deal, be it short or long term, is to be reached. The estimate of course highlights that we still think some kind of deal is possible and likely, but that room for manoeuvre is limited as well as time being tight.
Open Europe's estimate of the risk of Grexit
As talks between the Eurozone and Greece stuggle to make headway Open Europe has raised its forecast of the risk of Grexit to 40% - up from 25% at the peak of the Greek crisis in 2012. A deal still looks possible and most likely, but room for manoeuvre is limited and time is running short. Source: Open Europe
The estimates were cited by the
Daily Mail, business website
Quartz and the Guardian Live blog. Mats Persson told Channel 4 News that absent central bank liquidity – including Emergency Liquidity Assistance (ELA) over which the ECB has the final say – Greece will likely have to leave the Eurozone.
As expected,
the meeting fell short of most expectations and has now descended into confusion over how close an agreement really was. Firstly, Eurogroup Chairman Jeroen Dijsselbloem said,
We had an intense discussion and constructive, covering a lot of ground, also making progress, but not enough progress at this point to come to joint conclusions. So, we will continue our talks on Monday… It was my ambition to agree on the steps on the next couple days so that we could spend them well…Unfortunately we haven’t been able to do that.
Secondly, though, the
Financial Times reported that an agreement on a joint statement had in fact been close. Up until the last minute, it was thought that a joint statement had been agreed. But Greek Finance Minister Yanis Varoufakis made a last-minute call to Athens to get final approval and was denied. The statement was therefore scrapped. The disagreement is thought to have centred on the potential extension of the current bailout programme, which Greek Prime Minister Alexis Tsipras has categorically ruled out. The change came so late that some ministers, including Germany’s Wolfgang Schäuble, had already left assuming that a deal was done. However, the Greek government has denied ever giving its approval to the draft statement.
The upshot of all this is that no technical work can progress – on finding a short-term bridge agreement, or longer term debt adjustment for Greece – until a wider political framework is laid out. This will no doubt be discussed by EU leaders at the European Council summit today, but all eyes are on Monday’s Eurogroup for clear details. The self-appointed deadline of 16 February now looms large.
