Moneycontrol
Feb 22, 2012 04:02 PM IST | Source: CNBC-TV18

Growth agenda missing in Greece: Lloyd Bank

Trevor Williams, Chief Economist at Lloyds Bank feels that Greece requires great political will to get out of the crisis it is facing.


Trevor Williams, Chief Economist at Lloyds Bank feels that Greece requires great political will to get out of the crisis it is facing. Also a growth agenda is missing from the developments that have happened. He suggests that Greece taking an exit from the Euro will be the best way for them as well though despite a strong Euro, Europe is on the slowest growth environment compared to the rest of the world.


Below is an edited transcript of the interview. Also watch the accompanying video.
 
Q: Are you pleased with the developments of the last 24 hours; are you in that camp of people who are saying this not enough?


A: The latter. Even a 120 print 5% of GDP debt ratio by 2020, should the every optimistic economic assumptions turn out to be correct, is still intolerably high with very little prospect of it being reduced significantly beyond 2020. It is very difficult to see how the second bailout will work. You already need a third bailout. You need to bring it down to at least 80% of GDP, which implies that there needs to be a significant package to get it down to that kind of level. This comes down to the point of political will to enable that to happen.


Q: So are you saying that the loan amount or the bailout amount should have far exceeded a 130 billion euro? Alternatively, are you saying that the private sector should have taken a bigger haircut or that there should have been some other kind of ECB intervention? What is missing from this package?

A: What is effectively missing is a growth agenda. A way for Greece to be able to reduce the deficit through its ability to grow revenue and therefore that is contingent upon the economy growing and historically the best way of reducing debt is to grow GDP. There are little plans in this show as to how GDP is going to recover

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