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Greece In or Out?

Posted by
22 Jun 2015
Ahead of today's 'emergency meeting' and as the world waits in baited breath to see whether or not Greece will pull out of the European Union, it is interesting to note what the pros and cons of such an exit would mean for the members of the Union and for Greece as an independent country.

PROS

Internally and as a nation, a pro for Greece leaving the EU would be that in time the country would benefit from strong growth. A con to this is the fact that in order to get to this point the country would have to impose strict capital controls which would include a devaluation of currency. As it stands, Greece does not have the ability to devalue its currency while it is a part of the Eurozone; pulling out would allow this to occur, which would in turn attract foreign investors into the country and facilitate future long term growth.

CONS

The immediate cons of Greece pulling out of the Eurozone and potentially the European Union would be worse than the benefits that might come. The country would experience a severe depression in the short term while it adjusts to the new realities on the ground. Changing over from the Euro would not be easy as it was purposely designed not to have an "out”, so valuation of the new currency (presumably the old Greek drachma) would take time in itself to stabilise.

Another major con that would be created is the uncertainty in other EU countries; this uncertainty would take two forms. Firstly, other EU countries that are currently stable will worry what will happen to the stability of the Euro and potential devaluation in light of the fact that a heavily indebted nation like Greece could just walk away and forfeit their debt obligations. Secondly, other heavily indebted EU countries such as Portugal and Spain could consider an exit as an option of their own, especially if Greece as a nation benefits from doing so and leads the way.

Either way, there will be no winners following the decision but it will be interesting to see the immediate and long term effects either decision will bring.

What do you think? Do you believe it would it be best if Greece left the EU or remain with it? I'd love to hear your thoughts in the comments below…


Tagged In: Events, Finance, Legal
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