The risk of Greece exiting the euro zone have risen to as much as 75 percent, according to economists at Citi. Describing such an outcome as a “Grexit,” the Citi team said, however, that the chances of a broad-based break-up of the euro zone remain very low.
The result of the election in Greece was inconclusive , but saw radical parties on the left and right make big gains at the expense of incumbent parties, which have angered voters with their handling of that country’s debt crisis.
With the chances of the formation of a unity or coalition government looking remote, it appears likely that Greek voters will be asked to vote again, something that could see Greece fail to meet the terms of its recent bailout by the so-called “troika” of the European Commission, European Central Bank and International Monetary Fund.
“Without a functioning government, it seems highly unlikely that Greece would be in a position to present the Troika with plans for additional budget savings worth 7 percent of GDP by the end of June,” said Guillaume Menuet, an economist at Citi, in a research report on Monday.
Even with the support of new French President Francois Hollande, it is unlikely that Greece can obtain concessions on the terms of its current bailout, according to Menuet.
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