by Robert Watts
May 30, 2010
THE Greek government has been advised by British economists to leave the
Euro and default on its €300 billion (£255 billion) debt to save its
The Centre for Economics and Business Research (CEBR),
a London-based consultancy, has warned Greek ministers they will be unable
to escape their debt trap without devaluing their own currency to boost
exports. The only way this can happen is if Greece returns to its own
Greek politicians have played down the prospect of abandoning the Euro,
which could lead to the break-up of the single currency.
Speaking from Athens yesterday, Doug McWilliams, chief executive of
the CEBR, said:
“Leaving the Euro would mean the new
currency will fall by a minimum of 15%. But as the national debt is
valued in euros, this would raise the debt from its current level of
120% of GDP to 140% overnight.
“So part of the package of leaving the Euro
must be to convert the debt into the new domestic currency
Greece’s departure from the Euro would prove
disastrous for German and French banks, to which it owes billions of Euros.
McWilliams called the move “virtually inevitable” and said other members may
“The only question is the timing,” he said.
“The other issue is the extent of contagion. Spain would probably be
forced to follow suit, and probably Portugal and Italy, though the
Italian debt position is less serious.
Could this be the last weekend of the single currency? Quite possibly,