Chaotic Greek economy spells trouble for eurozone

Press quote (Radio Free Europe)
15 January 2010

Simon Tilford, chief economist at the Centre for European Reform in London, says that the case in particular of Greece poses a significant challenge to the eurozone. "On the one hand, they can't let Greece get away with pursuing unsustainable policies; on the other hand, at the same time they can't be too tough with the Greek government, because there is only so much the Greek government can do, there is already risk of social instability in Greece," Tilford says. ...Analyst Tilford sees no "chance at all of Greece being able to reduce its deficit as quickly as they are suggesting; with growth prospects so poor, with demand for their exports set to be so weak," which he attributes to Greece becoming uncompetitive within the eurozone, as well as the strength of the euro itself. He says this means that "their exports both inside and outside the eurozone will be weak - private consumption is going to be weak, if you then add big cuts in government spending, big cuts in real wages to reduce costs relative to other eurozone members, I think there is a real risk of a slump."