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Companies Cringe As European Stability Is Called Into Question

greek crisis

A Grexit Averted but a Crisis is Brewing

On Wednesday, 15 July 2015, the 300-member Greek parliament endorsed a European Union bailout deal that will see Greece receiving an estimated €86 billion in emergency bailout funds, contingent upon Greece enacting severe austerity measures. The Greek Crisis has sparked widespread protests in Athens and elsewhere, causing tremendous rancour within the ruling Syriza party and the Greek populace. But the troika – the European Commission, International Monetary Fund and the European Central Bank – require a combination of tax hikes and spending decreases in Greece in order for the bailout funds to go through. This is all being done in an effort to prevent the total meltdown of the Greek economy, which is imminent in the absence of bailout assistance. As it stands, Greeks can only withdraw a total of €60 daily from ATMs and banks, but the reality is that most people are only getting €50 per person per day out as there is a shortage of €20 notes. This is now a crisis of epidemic proportions, and it has impacted severely on business confidence in Greece and Europe.

Massive Turmoil Caused By Greek Crisis

The ramifications of the Greek Crisis have caused tectonic shifts across corporate Europe. Company sales have been scuttled and they are now enduring a cash crunch as multiple crises are unsettling customers across the region. Several European companies have even gone so far as cancelling their IPOs, including ADO Properties – the German real estate investor firm, and CBR Fashion Holding, a retailer. The damage has been so severe that travel and tourism companies like Thomas Cook plc and Tui AG have been taking calls from concerned clients about being able to access their money since Greece has introduced capital controls on accounts. The rot that has set in, and is likely to remain in Greece is indeed cause for concern in Europe. Many are concerned that a wider domino effect can take place as a result of Greek instability. Countries that are financially unstable such as Italy, Portugal and Spain may now also draw inspiration from the restructuring of debt obligations in Greece. The overall stability of the euro is now in question, and recent declines in the currency vis-a-vis a basket of currencies is indeed troubling.

What Next For European Companies?greek crisis

It’s not all doom and gloom for European companies in light of the Greek crisis. Several Dutch dairy manufacturers including Royal FrieslandCampina NV has actually seen an increase in orders of its products as Greeks continue to stock up on essentials. In terms of travel and tourism, Greece remains as popular as ever, and many people are looking to score good deals on visiting the Greek Isles. To counter the currency limit withdrawals at banks and ATMs, Thomas Cook plc has advised tourists to bring more cash with them so that they don’t have to be concerned with the austerity measures now in place. Fortunately for Europe, Greece only represents a tiny percentage of overall revenues, and the European Central Bank has been able to make contingency plans well in advance. Over the years many companies have decreased their reliance on Greece as a cash cow, and focused instead on other European nations. So for now, the troika will grease the wheels of the Greek economic wagon as the European engine begins to gain momentum once again.

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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

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