Bertelsmann Stiftung (ed.)

Dr. Thieß Petersen, Dr. Michael Böhmer

Policy Brief #2012/06:
Economic impact of Southern European member states exiting the eurozone

Policy Brief Series Future Social Market Economy

  • 1. edition 2012 (PDF)
  • Free of charge

While Greece defaulting on its sovereign debt and leaving the European Monetary Union would in and of itself have a relatively minor effect on the world economy, such a move could, however, undermine investor confidence in the Portuguese, Spanish and Italian capital markets and thus provoke not only a sovereign default in those states as well, but also a severe worldwide recession. This would in turn reduce economic growth by a total of 17.2 trillion euros in the world’s 42 largest economies in the lead-up to 2020. Hence it is incumbent upon the community of nations to prevent Greece from a sovereign default as well as leaving the euro, and the domino effect that this event could induce.