Tinos, GREECE (Reuters Breakingviews) - Alexis Tsipras is desperate to avoid “suffocating supervision” of Greece’s actions when the country’s third bailout programme ends next August. At the weekend, he promised as much. But the best the Greek prime minister can hope for is that Athens will move from its current high-security prison to an open one – and that will happen only if he behaves.
ATHENS (Reuters Breakingviews) - Despite an eleventh-hour wrangle over pensions last week, Greece’s creditors are soon likely to approve the latest payment due under its current 86 billion euro bailout programme. But this will only buy Athens time until mid-2018. After that, a new programme – the country’s fourth since the start of its financial crisis – will probably be required.
Investors think the UK will settle easily into a new deal with the European Union. More likely there will be cabinet wrangles, tortuous negotiations with the EU, and an unsatisfactory conclusion.
While other EU leaders are pressing Britain for a quickie divorce, the German chancellor is advocating a more measured approach. This is right. There’s no need to rush as the EU can protect itself from the immediate fallout. There’s even a chance the UK could change its mind.
Britain has much to gain from capital markets union and free digital trade, argues Breakingviews’ founder. But the boiling cauldron of the Middle East and North Africa, and the Leave camp’s misinformation, are even more worrying. Brexit would be a triumph for post-truth politics.
European politicians’ knee-jerk reaction if Britain votes to quit the European Union will be to integrate further. This would be foolish, provoking a populist backlash. A better response would be to loosen fiscal policy while embarking on bolder economic and market reforms.
A victory for Brexit will trigger political turmoil and acrimonious divorce talks. Investment will grind to a halt as firms wait for the fog to clear. That could cause a recession.
If the IMF and the EU can’t quickly resolve their conflict over Greece’s bailout, graphically highlighted by a WikiLeaks transcript, Athens could run out of cash in July. The sense of crisis would mount in the preceding weeks, just as the UK votes on whether to stay in the EU.
An offer to reduce disorderly migration would cut the risk of Britain leaving the EU and Greece quitting the euro. It would also shore up German Chancellor Merkel’s position, helping stabilise the EU and the Schengen Area. What it won’t do is stop anti-migrant populism in Europe.
Now Cameron has a deal with the EU, it’s down to the British people to vote. While the risk of Brexit looks less than evens, the economic consequences could be severe. With Boris Johnson bolstering the leave campaign, markets don’t seem to be factoring in the tail risks.