On the Brink of Default – The Greek Economy Tutor2u September 2011

Beware Greeks bearing debts A founder member of the Euro in 2001 After years of strong growth - went into recession in 2009 Budget deficit was fraudulently under-reported Fiscal deficit surged to 15.4% of GDP in 2010 Sharp loss of investor confidence Caused large rise in borrowing costs (bond yields) May 2010 Greece became the first euro zone member to receive a Euro 110bn rescue package from the EU and IMF Recession has continued Greece's govt debt is now 150% of GDP and rising Fiscal austerity has met with fierce political unrest Recognition that default is inevitable But with what consequences for Greece and the rest of Europe?

A Crisis of Confidence – Bond Yields

Real GDP Growth

Recession and Unemployment

Soaring unemployment

Decade of improved relative living standards is lost

An unsustainable level of debt

Fiscal Crisis Prompts Default

Fewer people in work and a weaker trend growth rate

Manufacturing and Property in a Slump