Gary's News and views

Gary Streeter MP for South West Devon

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.


Thursday, 8 January 2015


Greece is a fabulous country, with an impressive history and a glittering array of picturesque islands, well portrayed in that great film Mamma Mia. But Greece is in big trouble now, and has been since the global economic crash in 2008 and worldwide recession. 2015 could be their make or break year.

Unemployment is high, government debt through the roof and they have needed three major bailouts from the European Central Bank to keep them afloat and paying their bills. In exchange for this support from their fellow EU members, Greece has had to accept tough austerity measures involving savage cuts in all kinds of government spending.

Understandably, the people of Greece have had a bellyful of austerity, and in the elections due to be held in late January a coalition of ultra-left parties, who have a realistic chance of winning, are pledging to tear up the EU deal and start spending again. What money they will have to spend is unclear.

Why does any of this matter to us? Because if Greece does default on its obligations under the austerity deal, it is quite likely that they will be thrown out of the euro. This prospect is known as Grexit. The other Eurozone countries, especially Germany, are fed up with Greek indiscipline. Grexit might be a good thing for Greece in the short term as they can then devalue their currency and reap a bonanza in terms of cheap holidays. Where this leaves them in the longer term is another matter.

The problem is once one country defaults on its obligations and has to leave the Eurozone, others may well follow, most likely Portugal and the larger economies of Spain (where youth unemployment is 58%) and Italy. All of this speaks of instability and volatility which is never a good thing for markets or for those who export into those markets. In other words stormy weather in the Eurozone is bad news for the British economy.

The Euro only came into being in 1999, less than 20 years ago. This is a very short time in historic terms. It must still be considered an experiment. It clearly has some bumpy years ahead, and the jury is still out on whether it is even possible to have a single currency without a single government.

This is all happening in slow motion, a slow motion car-crash on the continent. But the shock waves may be felt in the UK.

posted by Gary @ 13:18