Greece continues to be hounded by the EU and IMF to implement further economic reforms. Despite massive cuts to spending and the impoverishment of large segments of the population, the fiscal budget is still way in the red (5.8% in 2016) and the national debt remains at crushing levels.
The government still accounts for 55% of all spending, this despite thirteen different austerity packages. Some 7 years after first erupting, the Greek economy is circa 27% smaller in euro terms whilst debt levels have scarcely budged.
Continuous austerity attempts are damaging GDP and slashing spending is becoming increasingly counterproductive. Yes, the Greek economy requires massive reform but enough is surely enough and some form of debt forgiveness is now in order. However, the chances of this happening ahead of the German elections in the second half of 2017 are remote. If the debt situation is not addressed after then, Grexit is a very real possibility. Thankfully markets have become inured to the prospects and are unlikely to react significantly if such an economic minnow was to slip away. However, such an exit could create an important precedent for the other Eurozone members.
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