Eurozone Crisis

March 15, 2013 by  

Eurozone Crisis, The coalition in Greece will collapse by the middle of next year, the Economist Intelligence Unit has warned.

Following Greece’s failure to convince the troika to release the next slice of bailout funds, Martin Koehring, analyst at the Economist Intelligence says the government will not last until the second half of 2014, causing a fresh election and potentially complicating relations with the troika even more. He says:

Disagreement over public-sector staffing levels remain the key issue preventing release of the latest bail-out tranche to Greece. With the unemployment rate already above 24%, the government finds it difficult to implement its commitment under the bail-out programme to reduce the public-sector workforce by 150,000 by 2015.

The troika has said that talks would resume in early April. However, the delay will create cash-flow problems for the government since the March tranche of funding will not now be authorised at least until April. It also jeopardises timely disbursement of the second-quarter tranche.

Ongoing disagreements between the troika and the government are set to exacerbate tensions within the fragile three-party coalition government. The Economist Intelligence Unit expects the coalition to collapse by the second half of 2014, causing a fresh election and potentially complicating Greece-troika relations further.

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