Article GEGH Greece needs wide debt relief to avoid permanent depression, thinktank warns

Greece needs wide debt relief to avoid permanent depression, thinktank warns

by
Larry Elliott Economics editor
from on (#GEGH)

NIESR claims that a haircut of 55% on Greek debt is needed to give the country a chance of reducing its debt to 120% of GDP

Greece's economy will suffer fresh damage from the austerity measures demanded by its creditors and will remain stuck in permanent depression unless it receives substantial debt relief, one of the UK's leading thinktanks has warned.

The National Institute of Economic and Social Research said the increases in VAT reluctantly accepted by the Syriza-led coalition in Athens in exchange for a new bail out will result in a 1% fall in national output in 2016.

Related: Greek bank shares slump again but creditor talks make progress - as it happened

Related: After the Greek crisis, it's time for a new deal on debt

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