A Grexit scenario and a return to the national currency, the quaint and feeble drachma of old, would translate into huge losses for the economy and social upheaval that Greece has not witnessed since WWII!
The results of a possible exit from the euro zone were detailed in a study presented by Ernst & Young, which compiled the report together with Oxford Economics. The well-known international professional services and audit firm made the data available to its clients.
Here are some of the predicted “highlights” of a return to the drachma:
— Banks closed for a lengthy period of time, as measured in months
— Devaluation of the new currency by 50 percent, in the best-case scenario, assuming that speculators don’t “pounce” on the new drachma
— GDP implosion by 20 percent, which if added to losses since 2008 would mean Greece’s economy would be halved in just seven years
— Unemployment reaches at least 30 percent (from 25 percent today)
— Rationing of fuels, medicines and even food for an unspecified period of time
— Domestic consumption falls by 25 percent
— Dramatic decrease in purchasing power and quality of life for lower-income households
— Income per capita would fall to 11,000 (as measured in euros) from 17,000 euros in 2014.
— Even with a 50-percent “haircut” of the public debt, the remainder would still be above 130 percent of GDP!