1. On the Brink of Default – The
Greek Economy
Tutor2u
September 2011
2. Beware Greeks bearing debts
• A founder member of the Euro in 2001
• After years of strong growth - went into recession in 2009
• Budget deficit was fraudulently under-reported
• Fiscal deficit surged to 15.4% of GDP in 2010
• Sharp loss of investor confidence
• Caused large rise in borrowing costs (bond yields)
• May 2010 Greece became the first euro zone member to receive a
Euro 110bn rescue package from the EU and IMF
• Recession has continued
• Greece's govt debt is now 150% of GDP and rising
• Fiscal austerity has met with fierce political unrest
• Recognition that default is inevitable
• But with what consequences for Greece and the rest of Europe?