Here we have Greece’s results from following the theory that unrestrained borrowing is the solution to a slower economy. How long before the U.S. has trouble convincing foreign entities to continue lending us money?
Greek lessons for UK debt
Greece’s collapse into a borrowing crisis this week has been swift. As Sarah Arnott reports, it is a precedent that the Chancellor must heed
Saturday, 12 December 2009
It is becoming a familiar story: bond markets in crisis, gilt yields soaring, the government struggling to convince international creditors that it can bring down spiralling budget deficits.
But the City’s wobbly response to the Chancellor’s pre-Budget report this week was a pale shadow compared with the carnage in Greece.
After a week that saw the Greek sovereign debt downgraded below the prized A-rating for the first time in a decade, and the worst bond market collapse in the history of the eurozone, Athens was scrabbling to restore confidence yesterday. At a two-day EU summit in Brussels, the Prime Minister, George Papandreou, promised far-reaching cuts in his country’s bloated bureaucracy and an assault on its rampant corruption.
Like Britain, Greece’s problem is its debt – currently running at €300bn (£270bn), the highest since democracy was restored in 1974, and expected to hit 113 per cent of GDP this year and more than 120 per cent next.
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