July 24, 2014
The white marble steps of the Grande Bretagne hotel on the edge of Syntagma square in Athens sparkle in the summer sun. Stone ripped out by protesters during riots at the height of the eurozone crisis in which Greece defaulted in 2012 has been replaced. The square heaves with tourists.
Greece seems back to normal. After contracting 25 per cent since early 2008, the economy has stabilised; this year it might even return to growth. Greece has also cleaned up its image in global capital markets. The government raised €3bn in five-year bonds at an interest rate of just 4.95 per cent in April, and a further €1.5bn in three-year debt this month.
Beneath the calm, however, fears remain about the future of the country, which two years ago threatened the collapse of Europe’s monetary union. “Risks have diminished substantially but a new constellation of economic and political risks may threaten reform implementation and economic recovery,” warns Lucas Papademos, prime minister from November 2011 until April 2012.
Sharp falls in incomes and “extraordinarily high” unemployment “have provided support to political forces on the extreme right and radical left”, he adds. “The greatly improved capital market conditions are not yet reflected in the Greek economy.”
One senior Greek businessman admits: “I was amazed that the government could issue bonds. How short are memories?”