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Greek issues rumble on

Charles Sylvester of the Ipswich Office notes that Greece is still weighing heavily on the global economy - will it be sorted soon, if ever?

by
Charles Sylvester

31.03.2015

 

The first quarter of 2015 is almost over. Since the start of the year there have been a few surprises and periodic wobbles, but overall this has been a good time for investors. Global equities have led the charge with the FTSE100 reaching an all-time high this month, and with the record low UK inflation figures just published, there should be a lot of confidence around the market’s longer term prospects.

As always in these situations there are however some clouds on the horizon; along with China’s economy, US interest rates, the UK Election there is still the problem with the Greek government’s ongoing issues with the Eurozone.

The so-called crunch talks last month seemed to result in another fudge that would kick the can down the road until Autumn; this, combined with the European Central Bank’s announcement about its Quantitative Easing programme, appeared to have saved the day.

However the crisis has still continued to rumble on in the background. Greece still hasn’t been allowed to get its hands on the bail-out money that it so desperately needs, in order to pay this month’s government salaries and pensions.

The trouble is that Greece needs to convince its creditors that it can change, and so far has only put forward a list of unconvincing potential reforms to the amount that it takes in tax revenues. Its Eurozone partners on the other hand want root and branch changes to its labour market and pension system.

It’s not unlike the way that British governments appear to fund everything with imaginary revenues received by cracking down on tax avoidance. However, Britain can get away with it because it controls its own currency and isn’t entirely dependent on the kindness of strangers. Greece can’t and is.

This article first appeared in the East Anglian Daily Times: www.eadt.co.uk

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