The Greece bailout situation is one of the most significant news stories of recent weeks and has dominated the headlines of newspapers and TV broadcasters alike.
This article will highlight – in a simplistic manner – the cause of Greece’s debt, the knock-on effect for other European countries and the possible solution to the crisis.
The Cause Of Greece’s Debt
Greece’s precarious situation can be pinned back to 2001 when they deceptively joined the EMU (Economical and Monetary Union) by downplaying their levels of debt in order to pass the obligatory requirements of the group. Once Greece became a part of the group, they acquired the ability to borrow money from other countries around Europe – such as Germany.
Greece obtained their current debt – now estimated at €350bn – by spending generously, enforcing an early retirement age and rewarding those working in the public sector too excessively.
The country’s concerns were only made public in October 2009 after George Papandreou – following in the footsteps of his father and grandfather – became the Prime Minister of Greece. Papandreou soon revealed that the country had been hiding their actual debt levels for a number of years.
Who Does The Debt Affect?
The majority of Greece’s debt recovery is being dealt with by Germany and France who hold $22.6bn and $15bn respectively. The United Kingdom is also involved with $3.4bn of the debt held and the possibility of further problems because London is the centre of Europe’s financial services.
The knock-on effect for Greeks has been dramatic with the government imposing austerity measures which results in a cut in benefits and public services like the education and health sectors. Unemployment levels are now soaring with nearly 50 per cent of under 25s out of work.
In May 2010 it was announced that Greece would be aided with a €110bn bailout with a further €130bn being provided by the EU (European Union), IMF (International Monetary Fund) and ECB (European Central Bank) in March 2012. However, Critics believe that Greece should not be solving their debt recovery with more debt.
Current State Of Affairs
With the Greek public unhappy with the imposed austerity measures, an election in May 2012 saw a number of parties who opposed the cuts backed but a lack of a majority resulted in deadlock.
On June 20 2012, it was announced that Antonis Samaras would become the leader of a coalition government – a merge with three separate political parties – as the country continues to battle against debt recovery.
Matthew Wood is an experienced content writer and trainee Search Engine Optimization technician. Matthew writes blog posts for several popular blogging communities, as well as creating on page content for a number of popular websites. His most recent venture is creating articles on behalf of the reputable online agency CBC International, who are a debt collection company based in Liverpool providing debt recovery services for small and large businesses across Europe.