BRUSSELS. – A Greek exit from the eurozone would certainly come at a cost to Europe, but just how expensive would it be?
The amount Athens owes its partners is equivalent to just a tiny fraction of the eurozone’s economy, but some analysts are still worried a “Grexit” could ultimately cost Europe its single currency.
Most analysts doubt it would come to that, but if it did Athens would be hard pressed to repay its bailout loans and would likely default.
“A Greek default on its around €240 billion in rescue loans would send another shock wave to the (euro) area,” said Guy Verhofstadt, president of the liberal ALDE group in the European Parliament.
Germany stands to lose the most if Greece fails to pay up €56,5 billion, according to Eric Dor, director of economics research at France’s IESEG School of Management, based on European Union data.
That works out to €699 per resident. For France the cost is €42, 4 billion, or €644 per resident. For Italy it’s €37,3 billion and Spain €24,8 billion.
Nonetheless, the €195 billion Greece owes is equivalent to just 4 percent of 2013 eurozone government spending, and the loans were scheduled to be repaid over many years. And eurozone banks, once considerably exposed to Greece, are no longer so.
JPMorgan says the lenders it covers have only about €5 billion in exposure to Greece.
Another cost of a Grexit, however, would be the uncertainty it would spark in a eurozone economy that has already nearly stalled.
“The biggest worry is about a financial stampede” to get out of Europe, said Thomas Grjebine, an economist at the CEPII international economics institute. Analysts are divided over whether a Grexit could be contained or if it would lead to a break-up of the eurozone. – AFP.