Grexit Greek Exit from Euro Zone

Grexit Greek Exit from Euro Zone.

Given the election result in Greece where the left-wing have taken over and are making 'noises' to review the Greek bailout, many leaders across Europe are making plans for a potential Greek exit from the euro zone.  A Grexit.

This week Prime Minister David Cameron has met with senior leaders and bank officials including the Treasury to discuss the impact on both Europe and the United Kingdom if there was a Greek exit.

We suggested many months ago that the Greeks were in fact planning a potential exit and had probably already made plans for a new Greek currency and new drachma. That said, German Chancellor Angela Merkel has this week suggested that the Germans may be open to re-negotiation with Greece on its debt.

For the Greeks to exit the European currency, this could prove disastrous with an immediate devaluation of any new drachma and we suggest Greece would be unlikely to be able to pay/afford to import food and this may prove disastrous.

As such, we do not believe at this stage that Greece will leave the Eurozone despite political spin when politicians speak in Greece and appearing more conciliatory when the Greek Prime Minister has been on his tour of Europe this week.

That said, it makes sense that British banking groups that are owed billions of euros by Greece should make plans for a potential default or indeed a renegotiation of terms which, if approved by the Germans will almost certainly happen.