Germans say Greece Euro exit is ‘manageable’ as diplomats prepare for another week of crunch talks over nation¿s spiralling debts

| August 21, 2012 | 0 Comments

By
Tim Shipman

14:02 EST, 20 August 2012


|

19:56 EST, 20 August 2012

Top German European Central Bank official Joerg Asmussen said a withdrawal by Greece would be manageable

Top German European Central Bank official Joerg Asmussen said a withdrawal by Greece would be manageable

European politicians prepared the way for Greece to exit the eurozone yesterday, describing such a scenario as  ‘likely’ and‘manageable’.

The comments came as eurozone diplomats prepared for another week of talks over the country’s spiralling debts.

German official Joerg Asmussen of the European Central Bank suggested: ‘A withdrawal by Greece would be manageable.’

However, he warned that the costs would still be high for Greece and ‘the whole of Europe’.

‘A withdrawal would not be as orderly as some imagine,’ he continued.

‘It would be connected with lower growth and higher unemployment, and very expensive.’

With Germany resisting calls to hand more cash to Greece, eurozone insiders no longer regard a Greek exit, or ‘Grexit’, as taboo.

Finnish foreign minister Erkki Tuomioja said Greece’s departure ‘looks likely’, but claimed it would ‘not necessarily be devastating’ for other members of the single currency.

‘We certainly do not hope this will happen,’ he told BBC Radio 4’s World At One.

‘But without further support or changes in its programme it looks likely. Nobody is forcing Greece out, and it is up to the Greeks themselves to make this decision if that were to be the case.

‘It’s not necessarily that devastating. The more important question is, is there a will and is there a method to keep the euro together with or without Greece?’

The collapse of the Euro could knock £100 billion off British economic output

The collapse of the Euro could knock £100 billion off British economic output

Mr Tuomioja added that ‘the big fear’ was that a Grexit would lead to contagion across Europe.

‘Greece itself I don’t think is that
much of a problem, because market lenders have already de facto
discounted their Greek holdings,’ he said. ‘But the question is, can it
be contained?’

The Daily Mail revealed last week
that the Treasury has calculated the collapse of the euro could knock
£100billion off British economic output – the equivalent of a 7 per cent
drop in GDP.

Greece has already had two
multi-billion international bailouts. However, despite taking a series
of harsh austerity measures that saw salaries and pensions slashed and
repeated rounds of tax hikes, the country is failing to pay its way.

Its government is asking the Germans
to hand over more money to slow the pace of cuts, but officials in
Europe’s largest economy have no appetite for granting more time to
comply with the terms of Greece’s rescue packages. German finance
minister Wolfgang Schaeuble said on Saturday: ‘I have always said that
we can help the Greeks, but we cannot responsibly throw money into a
bottomless pit.’

Greeks queue up to receive free milk in Athens at the beginning of the month following rising rates of poverty. Greece has already had two multi-billion international bailouts since 2010

Greeks queue up to receive free milk in Athens at the beginning of the month following rising rates of poverty. Greece has already had two multi-billion international bailouts since 2010

Similarly, the country’s
vice-chancellor and economy minister Philipp Roesler has said the idea
of Greece leaving the euro has ‘lost its horror’.

French president Francois Hollande
visits Berlin on Thursday for discussions with Chancellor Angela Merkel,
and will meet Greek prime minister Antonio Samaras in Paris on
Saturday.

Greek officials yesterday held talks
over €11.5billion (£9billion) of spending cuts, which the country must
make in order to continue receiving bailout money.

Finance minister Yannis Stournaras
said the package of cuts will be ready before the beginning of next
month, when investigators from the International Monetary Fund, European
Union and European

Central Bank will visit to monitor their efforts to save the Greek economy.

Ministers hope to have general
proposals ready for this week’s visit from Jean-Claude Juncker, the
prime minister of Luxembourg.

Mr Juncker, who chairs the eurozone finance ministers’ meetings, is due in the Greek capital tomorrow.

Mr Stournaras would not confirm
whether upcoming talks would be aimed at securing a two-year extension
to Greece’s austerity deadlines – as promised by Mr Samaras before he
was elected.
‘We will see, we will have a general discussion,’ the minister said.

Here’s what other readers have said. Why not add your thoughts,
or debate this issue live on our message boards.

The comments below have not been moderated.

Greece leaving the Euro!
Will it be the first of many countries to do so, to take control of their own finances?

What these unaccountable unelected rulers are afraid of is that Greece will survive and in fact prosper soon that they would under the EURO elite – who could not run a small general store never mind huge numbers of countries. So go and check out the reality of leaving the Euro – it is really hopeful, don’t keep buying into this doom and gloom that those who are milking the system want us to think.

‘lower growth and higher unemployment, and very expensive’ ! As compared to what? Aha, compared to the current cheap bailouts (many hundreds of billions), low unemployment (only 20%!) and thriving economy (5-th year in a row in recession)…
why don’t they leave the Greeks (and the rest) alone?

The UK will not escape the consequences unfortunately because the EU is our most important trading partner. I think we’re in for a rough ride!
– JD, London, 20/8/2012 23:24……………………..You are wrong…………….The EU is an important trading partner but the UK does more trade with non-EU countries.

“What great news for the Greeks!! I only hope the rest of us will be so lucky and leave France and Germany to suffer alone the union they have forced on the rest of the continent. Viva Greece!!!!! – Mr Kutya, The Shire, 21/8/2012 05:14″ I would give you more green arrows if I could. France and Germany are still inflicting suffering on Europe, even without war.

“The collapse of the Euro could knock £100 billion off British economic output” This is nothing to our national debt or what we pay into propping up the Euro….. I say lets leave just as we left the ERM and just think of what we can do without them……

Congatulations to Greece, the cradle of democracy. First to escape from under the jackboots. IT CAN BE DONE

Mr Tuomioja added that ‘the big fear’ was that a Grexit would lead to contagion across Europe——-I would call it Hope not fear

@Steve, Gibraltar – that’s certainly one way of looking at it. Another, and widely held view, is that the whole Euro concept was dreamed up by our teutonic friends as the means of maintaining German exports at an affordable level. This enables Germany to export its goods across Europe and the rest of the world. Within the Eurozone the lower-producing southern states end up supporting the German economy. Once the cost of bailing out the inevitable debts run up by these countries exceeds the benefits to the German economy then the Germans will pull out. This is what we are now seeing. On the whole it’s a better strategy that putting some Wagner on the CD player and marching through Poland.

should have been allowed to default and leave last year… they’d be on the road to recovery by now… however, egos got in the way and prevented the sensible solution… and now everybody is poorer as a result except the bankers of course…
– paul cooke, Gloucester, England, 21/08/2012 05:49
Bankers, bankers, bankers!! God move on!!
Although you might want to check how much the banks have lent Greece and the fact they have had a 70% write off already. Also no prospect of getting the rest!!
Banks annoy the hell out of me as well. They played a big part in the boom and bust. However so did the government and so did the people of the land.
We all made mistakes. Let’s move on and you sir, stop winging

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