As Greece agrees a bailout deal in principle with its creditors, will the agreement last?
Dr Holger Schmieding is chief economist at Berenberg, says Yes
Alexis Tspiras has learned the hard way that Europe is not bluffing. When he let the old bailout deal expire at the end of June, the European Central Bank stopped feeding Greece and its banks with further euros. The resulting closure of banks, with pensioners having to queue for just a little money, has been a salutary shock. Tsipras stopped playing games, fired his flashy but grossly incompetent finance minister and finally started to negotiate in earnest with the only willing creditors his country has. Having stared into the Grexit abyss, a broad majority in the Greek parliament and public will probably support the deal. If so, Europe will do the same. Risks remain, as always in life. The IMF and Europe quarrel about the precise timeline of reprofiling Greek debt. But chances are that Athens, knowing the alternative, will largely implement the deal. If so, the crippling uncertainty about the fate of Greece can recede, allowing the country to exit recession in late 2015.
Simon French is chief economist at Panmure Gordon, says No
There is nothing within this bailout deal that changes my outlook for Greece – namely that it exits the Eurozone. Investors comforted by levels of support within Greece for euro membership should be wary of a sharp reversal in sentiment, particularly as it becomes clearer that its economic destiny is being determined by foreign powers. This tipping point will arrive as the finer details of pension and product market reforms are implemented, and the assets within the €50bn privatisation fund are identified and sold. To return the Greek economy to growth requires substantial debt relief from its creditors. The economy also requires an urgent and sustained injection of government spending. But this latest deal insists on a primary surplus for the public sector of 1 per cent of GDP by 2017. This is the toxic legacy of an incomplete economic experiment that needs to either be concluded or abandoned.