Wilson Bennett reports on Greece’s frantic efforts to reach an accord with its creditors continue with the submission of a new reform plan.
Wilson Bennett says days after rejecting a raft of reform proposals put forward by European Commission President, Jean Claude Jüncker, Greek Prime Minister, Alexis Tsipras has tabled a revised reform plan that he hopes will pave the way to freeing up the final €7.2 billion tranche of bailout funds from his country’s creditors.
The submission is the latest development in a long line of ostensibly “last ditch” efforts by Greece to avoid running out of money and potentially having to leave the euro zone. Although no official details have been released, the latest reform plan is thought to include some Greek concessions on VAT reforms, some compromise on primary budget surpluses and a proposal that could see pensioners contribute 6% of their income towards healthcare instead of 4%.
“Mr. Tsipras has taken a more prominent role in negotiations after rumors that his Finance Minister, Yanis Varoufakis was described as ‘combative’ by some of the opposing negotiators,” said Will Sorenson, Head of European markets research at Wilson Bennett. “Mr Tsipras appears to take a more conciliatory approach,” he added.
German Finance Minister, Wolfgang Schaeuble has made no secret of his willingness to let Greece leave the EU although, publicly, he maintains that he is committed to an outcome that sees the country remain an active member of the euro zone.
Wilson Bennett has warned clients that while Europe may not be as vulnerable to a Greek exit from the euro zone as it was in 2010 when the crisis first began, the much-vaunted “firewalls” that have been built into the financial system to prevent widespread contagion in the event of a default may not be as effective as policymakers believe.
“The biggest threat to the euro zone and the euro itself is the notion that membership is not necessarily permanent,” concluded Sorenson.
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