The Eurozone Crisis
A discussion surrounding the Greek Debt Crisis
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Greece wasn’t always like this. It joined the Eurozone, so inherited the Euro in 2001, and all was going well. It had one of the top economies in the world, but during the 2008 financial crisis, which impacted most of Europe including the UK, the main industries of Greece were hit hardest.
This led to increased public spending and borrowing from many creditors, two of these being the IMF (international Monetary Fund) and ECB (European Central Bank), this leads us to the current situation.
Greece has got mounting debts and unsustainable repayments to make, which at the moment they can’t meet. The biggest problem is that they need more money to help rebalance their books, but without repaying their current debts – no one wants to lend them any more money.
This is why emergency talks have been happening between leaders from EU member states to try and strike a deal with Greece to sort out the issue and find the best solution for both Greece and other EU states.
So far, emergency talks between EU leaders have failed with no agreement reached between Greece and its creditors.
It is becoming increasingly likely that Greece will have to default on the payments they owe to the ECB and IMF, which could mean that they may have to leave to leave the Eurozone and possibly the EU as a consequence.
This could mean that Greece would have to go it alone, with their own currency and receive very little support - via trade or financially - from a group of countries like the EU, but it could be good news for them as they would be almost starting afresh.
If they could get their debts wiped, if all countries agreed, they could start from a clean slate to sort out their finances- how much they can spend on different things, without thinking about the payments each EU member state has to pay to the EU.
However this would involve almost the impossible, to get every EU member state to agree to wipe Greece’s debt and allow them to restart, but as we have seen to even get members of states to agree on what to do at the moment is taking an age.
As a member of the EU we have the obligation to pay into a fund to help out other countries in the form of bail outs. In past years the money we have paid in has gone to countries like Greece and Ireland when they needed a financial boost, however this isn’t a long term fix. We have also been a part of the talks between EU leaders and can influence decisions.
The Greek people have been hit the hardest by the crisis, as the cuts the Government have to make to release the money from the creditors, mostly came from public services and higher taxes. This meant that unemployment figures grew and some people went below the poverty line.
As a consequence of this, unrest and riots have been a frequent thing in recent years. However all of the protesting has done some good and has got the Greek minister Alexis Tsipras to act. He has told their creditors that they can make cuts but it isn’t going to involve cutting pensions or raising taxes.
Currently the Greece crisis is affecting people day to day; they aren’t sure whether their money is safe or secure.
Many Greek people are withdrawing their money from the banks, leaving many pensioners unsure whether they will get their pensions on time and now it is becoming unsure as to whether the banks will even open.
This crisis is even affecting holiday makers going to Greece, as Greece is in the Eurozone its economy affects the price of the Euro compared to other currencies. It could almost mean if holiday makers want money from cash points in Greece, they may not be able to.
I imagine it will be a long time before Greece’s finances are back to the state they were in before the financial crisis and it is unsure whether they will have to leave the Eurozone and possibly the EU.