The euro crisis, considered overcome by many in Europe, could return on a massive scale in 2015. If Greece’s far-left SYRIZA party, which is currently leading in opinion polls, wins snap elections, financial market confidence will likely be unsettled, said Deutsche Welle in an article.
“The Greeks know very well what a wrong election result would entail,” European Commission President Jean-Claude Juncker warned bluntly.
In its analysis, Goldman Sachs has been even more outspoken. “In the event of a [SYRIZA-led government no longer paying its debts, leading to a] severe Greek government clash with international lenders, interruption of liquidity provision to Greek banks by the ECB could potentially even lead to a Cyprus-style prolonged ‘bank holiday’,” it said.
Greece, owing a total of 250 billion euros to the International Monetary Fund (IMF) and various EU institutions, would tumble into financial chaos. A Greek tragedy would obviously affect other states with onerous debts: risk premiums for Cyprus, Italy, Portugal and, possibly, France would increase. This would be poison for public budgets, which are to be used for investments as opposed to increased interest burdens.