Schroders has brought forward its estimate of when Greece will leave the euro by three months, warning that if a centrist Government does not emerge “we are heading for the endgame”.
Speaking at a PanaceaIFA event at Schroders’ offices in London today, European economist Azad Zangana said the result of Greece’s May election had lead to the new forecast. Parties from the far left and far right made significant gains in the poll but no party was able to form a Government.
The country will have a fresh round of elections on June 16.
Zangana said: “It does look like now we are heading for the endgame. Our own view at the end of last year was Greece would exit by the end of this year. We have now changed this to say we expect Greece to exit by the third quarter of this year.
“That is on the back of the elections we have just had showing the more extreme left wing party doing very well. We have the deadlock in the elections. Without any kind of centrist government coming in clearly an exit is likely.”
Zangana added that 30 per cent of deposits in Greek banks have been withdrawn over the past year.
He also told the conference that Schroders expects no rise in interest rates until early 2014 at the earliest. “To be honest even then that is looking a little optimistic at this stage. If anything we are expecting more quantitative easing from the bank fairly soon,” he said.