Coursework 2010-2011

“Critically Discuss the Economic and Political Impact of the Greek Economic Crisis for the
Euro-Zone.”

Module: Political Economy of the European Union
Lecturer: Cornelia Junge
Code: EC0902A

Anne Onclin 1005446

Table of Contents

1. Introduction ………..1
2.The Euro-zone system 2 2.1. Introduction and the five criteria 2 2.2. The problems of this system 3 2.3. The current situation 4
3. The economy of Greece 5 3.1. The causes of the crisis 6 3.2. The current situation 7
4. The political and economic impact of the Greek economic crisis on the Euro-zone 8
5. Conclusion 10
6. Bibliography 11

1. Introduction

In early 2010 sovereign debt crisis affected several countries located in Europe. The countries situated in the Euro-zone were called PIIGS, a grouping acronym used by some economists in order to refer to the following five countries; Portugal, Italy, Ireland, Greece, and Spain.
According to Ambrose Evans-Pritchard, the international business editor of the Daily Telegraph, those countries are responsible for the weakening of the trade performance of the Euro-zone bloc (Unknown a ).

The Greek economic crisis represented the beginning of different crises: fiscal, political and social ones. It also caused a tragic crisis of confidence.
All those crises are the answers to two of the largest issues for Europe: “the future of the democratic welfare state” and “the usefulness and the power of the single currency used by 17 countries” (Samuelson 2010 a).

In attempting to understand the political and economic impact of the Greek crisis on the Euro-zone it is necessary to examine some significant points more precisely; firstly the Euro-zone system, its setting up, its problems and the current situation and secondly it is important to have a look on the Greek economic situation.

2. 3. The Euro-zone system

4.1 introduction and the convergence criteria

Europe stands for a