Greece’s competitiveness has greatly improved and its wage costs have fallen significantly and the eurozone must strive to keep the country as a member, the chairman of the Eurogroup of finance ministers said on Tuesday.
“It is not the case that the programs (for Greece) have been ineffective,» Jean-Claude Juncker told Bavarian television. «(A Greek exit) from the euro would be disastrous for the Greeks… Europe as a whole would be weakened too.”
Some politicians in Germany and elsewhere have publicly suggested that Greece, with a heavy debt load and now in its fifth year of recession, might fare better outside the eurozone.
Juncker also said the eurozone would make «really tough» demands of Spain on structural reforms and budget savings. Madrid is coming under growing market pressure to request aid from the eurozone’s bailout fund to help finance its debts.
Juncker, who is also prime minister of Luxembourg, said plans for a new banking union had to be very carefully prepared and, echoing German concerns, added that it was difficult to envisage how the new supervisory body could oversee all 6,000 or so banks in the eurozone from the start. [Reuters]