The Greek Bailout Will Cost Every Eurozone Household Over $2000

Family France

Photo: AP

While Greece has a big vote of no-confidence today, and a bailout vote to come, London-based think tank Open Europe has already calculated what the cost of bailout two would be for Europe’s tax payers.Open Europe estimates that:

Under a second bailout, the share of Greece’s debt underwritten by foreign taxpayers (via the EU, ECB and the IMF) will go from 26% today to a massive 64% in 2014. Put differently, each household in the eurozone today underwrites €535 in Greek debt – by 2014 and following a second bailout, this will have increased to a staggering €1,450 per household. On top of this, there are also numerous European banks which are largely taxpayer owned which have significant exposure to Greece (for example the Belgian-French Dexia and German Hypo Real Estate). This makes a second Greek bail-out far more politically contentious than any of the existing rescue packages, given the likelihood of debt write-downs with taxpayers footing a huge chunk of the bill.

That’s $2080 per household in the eurozone, a significant rise on the cost per household ($768) of the previous bailout. Notably, a default will likely also increase costs for individual governments if their banking sectors are to be affected, which could be passed on to taxpayers.

Read the full report at Open Europe >

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