In the July 2015 economic update video for eZonomics, ING senior economist Teunis Brosens talks through implications of the 13 July deal between European leaders and Greek prime minister Alexis Tsipras.
“In a worst case scenario, this agreement is ‘the beginning of the end’ for Greek membership of the euro. Because there are still many ways in which accidents could happen,” says Brosens.
“But even in a best case scenario, the agreement is only ‘the end of the beginning’.”
This Greek debt crisis started more than five years ago.
The three major credit rating agencies downgraded Greece’s credit rating in December 2009 over concerns about repaying high levels of debt.
The Eurozone country has since introduced a series of austerity measures and obtained various bailout packages.
The 13 July agreement happened after Greece became the first developed country to miss a payment to the International Monetary Fund, having already delayed it once.
It’s not over
Brosens highlights three major reasons why the situation in Greece remains fragile.
He says there are still many hours of negotiations ahead in Athens and Brussels and “objections from just one of the 19 eurozone members could derail the entire process”.
Talk of Grexit changed us
Brosens says there are far-reaching consequences for the eurozone as a whole from the open discussion of a Greek exit – or Grexit – from the eurozone.
“Back in 2012, ECB president Draghi successfully calmed financial markets by pledging to do ‘whatever it takes’ to save the euro. Next time the euro is hit by severe unrest, those words will no longer be able to work their magic.”