Thu, 31 May 2012
ATHENS
— If Greece left the euro, living standards would plummet, incomes
would be slashed by more than half, and inflation and unemployment would
skyrocket, the National Bank of Greece warned.
In a report released ahead of an election on June 17 that may determine
whether the country stays in the single currency, the country’s biggest
bank said the risk of Athens exiting the euro was no longer just a
theoretical possibility, warning that the fallout from such a move would
be dramatic.
“An exit from the euro would lead to a significant decline in the living
standards of Greek citizens,” the NBG wrote ahead of a vote which
parties opposed to austerity measures that have kept Greece in the euro
so far have a chance of winning.
The bank said per capita income would collapse by at least 55 per cent,
the new national currency would depreciate by 65 per cent against the
euro and a recession, now in its fifth year, would deepen by 22 per
cent.
Painting a dire picture of post-euro Greece, it added that unemployment
would jump to 34 per cent of the work force from around 22 per cent now
and that inflation would rise to 30 per cent from its current level of 2
per cent.
The NBG is due to report its first quarter earnings yesterday and is
expected to announce a loss. Greek banks, including NBG, have
hemorrhaged deposits since the crisis began and are perceived to be in
favour of retaining the euro because the alternative might trigger a run
on their reserves.
The NBG said it wanted to contribute to dialogue about Greece’s future with respect to the euro.
Greece had to call a repeat election for June 17 after an inconclusive
vote on May 6 left the parliament divided between parties that support
and oppose the austerity steps that were a precondition of a second
130-billion-euro bailout agreed with the European Union and
International Monetary Fund in March.
Tax rises and spending cuts insisted upon by the EU and IMF in order to
save the country from default have caused a wave of corporate closures
and bankruptcies, sparking angry protests that have often turned
violent. More than half of Greeks aged 15-24 are unemployed, according
to the latest figures.
While most Greeks want to keep the euro, about two thirds are against
the deep salary, pension and job cuts that come with continued
membership of the single currency, according to the latest opinion
polls.
Greece’s conservatives have regained a tentative opinion poll lead that
suggests they may be able to form a pro-bailout government committed to
keeping the country in the euro. But the vote is still deemed too close
to call. — Reuters
