Citi sees 90 pc chance of Greece leaving the euro

Last updated 20:46 26/07/2012

Relevant offers

World

China's richest man moves into marathons as part of global sports expansion Trump 'determined to unleash economic growth for businesses' with plan to slash taxes Big Bash or bust for Nine in face of falling popularity in cricket on TV CEO to step down from Dreamworld owner Ardent Leisure Big Mac makeover gives McDonald's a boost China will lead wind power growth over next five years Ready for take-off? China's answer to Boeing now just needs to sell Block Island: The US island that wants to keep out Uber Record high on Wall Street as Nasdaq beats 6000 Australia's Channel Nine urged to step away from cricket broadcasting

The chances of Greece leaving the euro in the next 12-18 months have risen to about 90 per cent, US bank Citi said in a report on Thursday, saying Athens was most likely to quit the single currency within the next two to three quarters.

The report, dated July 25 but distributed in an email on Thursday, said the bank expected Italy and Spain to take a formal bailout from the European Union and IMF on top of the banking aid for which Madrid has already asked.

Citi economists had previously put the chances of a Greek exit at 50 to 75 per cent.

''We remain gloomy on the euro crisis,'' Citi economists said.''Over the next few years, the euro area end-game is likely to be a mix of EMU exit (Greece), a significant amount of sovereign debt and bank debt restructuring (Portugal, Ireland and, eventually, perhaps Italy, Spain and Cyprus) with only limited fiscal burden-sharing.''

Citi said it expected Greece's exit from the euro coupled with economic weakness in the euro zone's periphery to trigger further sovereign downgrades in the single-currency bloc in the next two to three quarters.

It saw at least a one-notch downgrade by at least one major agency for Austria, Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.

Outside the euro area, Citi expects both the US and Japan to have their ratings cut by one-notch over the next two to three years.

Also Britain may lose its triple-A rating over the same period due to economic weakness and fiscal slippage.

Ad Feedback

- Reuters

Special offers

Featured Promotions

Sponsored Content