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Monday 18 December 2017

Neighbours fear Greece euro exit

THERE remains a chance of Greece exiting the eurozone in the coming months, credit rating agency Standard & Poor's has said.

"This could be brought about by Greece rejecting the reforms demanded by the Troika -- the European Commission, IMF and the ECB - and a consequent suspension of external financial support," Standard & Poor's said in a new report.

"Such an outcome would, in our view, seriously damage Greece's economy and fiscal position in the medium term and most likely lead to another Greek sovereign default."

But the impact of a Greek exit on other fiscally weak eurozone countries could be less clear cut.

Other countries are unlikely to follow Greece out of the monetary union, a view echoed by finance minister Michael Noonan.

Standard & Poor argues that the hardships Greece would suffer by reverting to its own currency would dissuade other countries from following suit.

And European leaders would be eager to demonstrate that Greece is a special case and would act quickly to support other struggling governments.

Standard & Poor said leaving the euro and bringing back the drachma would "seriously damage" the Greek economy and that it would take years for Greece to realise any benefits from devaluing its currency.

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