It was projected that the turmoil in Greek could bring about a second credit crunch, making it to be very much difficult for one to get a mortgage and at the same time those who save were expected to go on suffering from “rock-bottom” interest rates. During the last week of June 2011, the possibility of Greece defaulting on its debts, bringing about yet another banking crisis in Europe, dominated the news (Forelle & Fidler, 2011). The financial problems in the region were felt by the British savers as well as investors and borrowers even if they were not in the Eurozone (Simon, 2011). According to Shipman (2011), it had emerged that “Britain could be hit with losses of up to 366 billion Pounds from the collapse of the Greek economy” (Shipman, 2011, para 1). This paper is going to look at the costs that were anticipated in relation to the Greek Euro crisis.
The Possible Costs that Were Anticipated In the Greek Euro Crisis
According to one correspondent of the World Socialist Website (2011), “the threat of national bankruptcy in Greece is not a national phenomenon but rather an integral element of the global crisis of capitalism” (World Socialist Website, 2011, para 1). The correspondent went further to point out that the “international financial oligarchy is determined to resolve the crisis at the expense of the living standards of working people…the frontal attack on the Greek working class is only the prelude to a worldwide social counter-revolution” (World Socialist Website, 2011, para 1).
At the meeting that was held in the month of July 2011 in Germany(the “Greece and the euro crisis” meeting), the chairman of the “German Socialist Equality Party”, Ulrich Rippert, described the outcomes of the Greek rescue package for those people who were affected as; “lower wages, lower pensions, mass layoffs, higher health care costs and higher taxes…everything won by the working class in struggle during the past hundred years is now being challenged due to the historical crisis of capitalism” (World Socialist Website, 2011, para 2). It was pointed out that the level of the cuts that were agreed upon was high. It was anticipated that the total amount of money to be saved by the year 2015 would be 28 billion Euros in Greece, a country which is small in size and this amount could be equivalent to a total amount of three hundred billion Euros in Germany.
It was also anticipated that about one hundred and fifty thousand jobs in the public service would be lost, with the employees who would be able to retain the jobs they had being subjected to a 30% pay cut (Forelle & Fidler, 2011). It was also anticipated that there would be privatization of the companies that were owned by the state at a total amount of 50 Euros and at the same time the Value Added Tax (VAT) for catering companies was expected to go up by 10%. It was projected that this would in turn cause a large number of Greek families that depend on tourism to lose their businesses.
In conclusion, the Greece euro crisis has had an effect on a large number of European countries. There were several possible costs that were anticipated in regard to the Greek euro crisis. The health care costs that were expected to increase, loss of jobs, pay cuts, and increase in the VAT among others.
Forelle, C. & Fidler, S. (2011). E.U finance ministers struggle over Greece Aid. The wall Street Journal. Web.
Shipman, T., (2011). Greek crisis could cost UK 336 bn pounds: Britain exposure significantly underestimated. Web.
Simon, E., (2011). The real cost of the Greek crisis. Web.
World Socialist Website, (2011). Greece and the euro crisis. Web.