Benefits of staying with the EU ‘may be permanent’ for Greece

Published: Tuesday 29 May 2012
Professor Ray Barrell
Professor Ray Barrell

Brunel’s Professor Ray Barrell has said that although leaving the Eurozone would have ‘transitory’ benefits for Greece, those of staying ‘may be permanent’.

The Professor of Economics and Finance made the comments when he gave his opinion on Greece and the Eurozone crisis to The Guardian alongside other academics and financial experts last week.

Writing in The Guardian, Professor Barrell said: “The gains from leaving would be immediate, with a devaluation restoring competitiveness and raising employment.

“However, they would be transitory, as borrowing costs and inflation would climb and be more variable with a floating currency. The need to reform the labour market would be less pressing.”

Professor Barrell went on to suggest that although Greece could keep their low retirement age and generous pensions if they left the EU, they would lose out on benefits that they currently enjoy.

“Greece would lose easy access to borrowing, and taxpayers would soon have to face the reality that they would have to pay for those pensions and support all the other structures that need reform.

“On balance, the advantages would press the Greeks to stay. Some of the advantages of being in the EU could be kept with an association agreement, such as the one Norway has, but it would be much harder to influence trade and competition policy, and subsidies would dry up.”

He said that if the Greeks left and defaulted on the rest of their debt, there is a ‘good chance’ that they will not have as much of a voice when it came to future EU decisions.

Professor Ray Barrell’s views can be read in full in the article Eurozone crisis: what if… Greece leaves the single currency on The Guardian’s website.

Page last updated: Tuesday 29 May 2012