Grexit must happen today

EU flag

EU flag

What an EU shambles!  Last Sunday, Greece voted against austerity.  This weekend, the Greek left-wing government has put up a deal that accepts an austerity package but at a huge financial cost to EU members.  There are rumours that the meeting of all 28 country leaders has been cancelled but the Eurozone members are still to meet.  With Germany and France at loggerheads and Finland threatening to veto any deal, it is not just a major shambles but the antithesis of what European integration was always supposed to mean.

Greek flag
Greek flag

 The simple truth is that Greece should never have been allowed to join the EU to start with.  Neither should quite a few other member countries. It is utterly obvious that you cannot shackle together countries with hugely different economies unless you also shackle together their political and fiscal decision making.  It would be pointless to allow bicycles and minis to join in a F1 race; you would not allow an eight-stone teenager to go into the boxing ring with a professional heavyweight; you would not expect a railway train to be made up of carriages with different track widths.  It was madness to harness into a single currency countries with vastly different economic profiles, from first world to third world.  It was never going to work without joining up political and fiscal decision making.

So, hard as the decision may be, Greece has to exit the euro zone and, probably the EU.  It will be better off once it has come through the immediate trauma with a devalued drachma providing some relief once it has been implemented.  There will be pain for many creditors but there will be considerable pain for Greek residents who are not to blame directly for their predicament although many of them have quietly enjoyed the lack of financial discipline that has characterised the Greek economy. This means the EU and I suppose that includes the UK will have to provide immediate humanitarian aid to get the Greeks through the immediate drama.  What the EU should not do is to approve a fudge that will allow Greece to limp along within the Eurozone and with a burden of debt it cannot hope to repay and inevitably bring the country back to crisis point within a short time.

About Keith R Mitchell CBE

Qualified as a Chartered Accountant in 1967. Pursued a successful career in financial training and publishing until selling his interests in 1990. Elected a County Councillor for the Bloxham Division in 1989. Leader of Oxfordshire County Council 5 November 2001 to 15 May 2012. Chairman of the South East England Regional Planning Committee July 2002 to July 2005. Chairman of the South East England Regional Assembly July 2005 to July 2008. In HM the Queen’s 2007 Birthday Honours, appointed a Commander of the Most Excellent Order of the British Empire in recognition of services to local government.
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