According to Citi, the probability that Greece will leave the euro in the next year or in the next 90 months has risen to 18%. And the next two to three months will be the most probable period. Analysts also expect Spain and Italy to make formal applications for financial aid from the European Union and the International Monetary Fund. In the past months Citi estimated the probability of Athens leaving the Eurozone at 50-70%.
“We remain pessimistic about the euro crisis – they write – in the coming years we will see exits (Greece) and a significant amount of sovereign debt restructuring and bank restructuring (Portugal, Ireland and possibly, perhaps, Italy, Spain and Cyprus) in the presence of a limited sharing of the tax burden”. With lots of new sovereign debt downgrades triggered by Greek defection: at least one step against Austria, Belgium, France, Germany, Greece, Ireland, Italy, Holland, Portugal and Spain. But also outside the EU, the USA and Japan. And even Britain could lose the triple A in light of the weakness of the economy.
