Is Greece growing more quickly than the UK?

Today we return to a long running and grim saga which is the story of Greece and its economic crisis. However Bloomberg has put a new spin on it as follows.

Greece is growing faster than Britain and is outperforming it in financial markets.

Okay so let us take a deeper look at what they are saying. Matthew Winkler who is the Editor-in-Chief Emeritus of Bloomberg News, whatever that means, goes on to tell us this.

In a role reversal not even the most prescient dared to anticipate, Greece is growing faster than the U.K. and outperforming it in financial markets. ……..Now that Europe is leading the developed world in growth, productivity and job creation after the euro gained 14.2 percent last year — the most among 16 major currencies and the strongest appreciation since 2003 — Greece is the biggest beneficiary and Britain is the new sick man of Europe.

This is really quite extraordinary stuff isn’t it? Let me just mark that the author seems to be looking entirely through the prism of financial markets and look at what else he has to say.

In the bond market, Greece is the king of total return (income plus appreciation), handing investors 60 percent since the Brexit vote. U.K. debt securities lost 3 percent, and similar bonds sold by euro-zone countries gained 7 percent during the same period, according to the Bloomberg Barclays indexes measured in dollars. Since March 1, 2012, when the crisis of confidence over Greece was at its peak and its debt was trading at 30 cents on the dollar, Greek bonds have returned 429 percent, dwarfing the 19 percent for euro bonds and 10 percent for the U.K., Bloomberg data show.

Also money is flowing into the Greek stock market.

ETF flows to Europe gained 15 percent and 13 percent to the U.K. during the same period. The Global X MSCI Greece ETF, the largest U.S.-based exchange-traded fund investing in Greek companies, is benefiting from a 35 percent increase in net inflows since the 2016 Brexit vote.

Finally we do actually get something based on the real economy.

The same analysts also forecast that Greece will overtake Britain in GDP growth. They expect Greece to see its GDP rise 2.15 percent this year and 2.2 percent in 2019 as the U.K. grows 1.4 percent and 1.5 percent.

Many of you will have spotted that the Greece is growing faster than the UK has suddenly morphed into people forecasting it will grow quicker than it! This poses a particular problem where Greece is concerned and can be illustrated by the year 2012. Back then we had been assured by the Troika that the Greek economy would grow by 2% on its way to an economic recovery and the UK was back then enmeshed in “triple-dip” fears. Actually there was no UK triple dip and the Greek economy shrank by around 7% on the year before.

GDP growth

According to the Greek statistics office these are the latest figures.

The available seasonally adjusted data
indicate that in the 3rd quarter of 2017 the Gross Domestic
Product (GDP) in volume terms increased by 0.3% in comparison with the 2nd quarter of 2017, while in comparison with the 3rd quarter of 2016, it increased by 1.3%.

Thus we see that if we move from forecasts and rhetoric to reality Greece has some economic growth which we should welcome but not only is that slower than the UK in context it is really poor if we look at its record. After the severe economic depression it has been through the economy should be rebounding rather than edging forwards. I have written many times that it should be seeing sharp “V Shaped” growth rather than this “L Shaped” effort.

If we look back the GDP at market prices peaked in Greece in 2008 at 231.9 billion Euros but in 2016 it was only 175.9 billion giving a decline of the order of 24% or 56 billion Euros. That is why it should be racing forwards now to recover at least part of the lost ground but sadly as I have predicted many times it is not. Even if the forecasts presented as a triumph above come true it will be a long long time before Greece gets back to 2008 levels. Whereas the UK economy is a bit under 11% larger and to be frank we think that has been rather a poor period.

Job creation

You may note that there was a shift to Europe leading the world on job creation as opposed to Greece so let us investigate the numbers.

The number of employed persons increased by 94,071 persons compared with November 2016 (a 2.6% rate of increase) and decreased by 9,659 persons compared with October 2017 (a 0.3% rate of decrease).

I am pleased to see that the trend is for higher employment albeit there has been a monthly dip. Actually if we look further the last 3 months have seen a fall so let us hope we are not seeing another false dawn. Further perspective is provided by these numbers.

The seasonally adjusted unemployment rate in November 2017 was 20.9% compared to the upward revised 23.3% in November 2016 and the upward revised 20.9% in October 2017. The number of employed in November 2017 amounted to 3,761,452 persons. The number of unemployed amounted to 995,899 while the number of inactive to 3,242,383.

The first issue is the level of unemployment which has improved but still has the power to shock due to its level. The largest shock comes from a youth unemployment rate of 43.7% which is better than it was but leaves us mulling a lost generation as some seem set to be out of work for years to come and maybe for good. Or perhaps as Richard Hell and the Voidoids put it.

I belong to the Blank Generation, and
I can take it or leave it each time.

Before I move on I would just like to mark the level of inactivity in Greece which flatters the numbers more than a little.

Bond Markets

Last week there was a fair bit of cheerleading for this. From the Financial Times.

Greece has wrapped up the sale of a seven-year bond after a 48-hour delay blamed on international market turbulence, raising €3bn at a yield of 3.5 per cent. The issue marked the first time since 2014 that the country has raised new money. A five-year bond issue last July raised €3bn, about half of which involved swapping existing debt for longer-dated paper.

The problem is in the interest-rate as Greece has got the opportunity to borrow at a much higher rate than it has been doing! Let me hand you over to the European Stability Mechanism or ESM.

The loans, at very low-interest rates with long maturities, are giving Greece fiscal breathing space to bring its public finances in order……..Moreover, the EFSF and ESM loans lead to substantially lower financing costs for the country. That is because the two institutions can borrow cash much more cheaply than Greece itself, and offer a long period for repayment.

As you can see the two narratives are contradictory as we note Greece is now choosing to issue more expensively at a considerably higher interest-rate or yield. This matters a lot due to its circumstances.

They point to the debt-to-GDP ratio, which stands at more than 180%.


I would be more than happy if the Greek economy was set to grow more quickly than the UK as frankly it not only needs to be growing much faster it should be doing so for the reason I explained earlier. As someone who has consistently made the case for it needing a default and devaluation I find it stunning that the Bloomberg article claims this is a success for Greece.

 the euro gained 14.2 percent last year — the most among 16 major currencies and the strongest appreciation since 2003

After all the set backs for Greece and its people what they do not need is a higher exchange rate. Finally the better prospects for the Euro area offer some hope of better days but they will be braked somewhat by the higher currency.

The confused narrative seems to also involve claiming that paying more on your debt is a good thing. Awkward in the circumstances to be making the case for sovereignty! But the real issue is to get out of this sort of situation which is sucking demand out of the economy. From Kathimerini.

 It is no coincidence that the “increased post-bailout monitoring” is expected to end in 2022, when the obligation for high primary surpluses of 3.5 percent of gross domestic product expires.

So in conclusion there is a lot to consider here as we wish Greece well for 2018. It badly needs a much better year but frankly also more considered and thoughtful analysis as those who have suffered through this deserve much better. The ordinary Greek was mostly unaware of what their establishment was doing as it fiddled the data and let the oligarchs slip slide away from paying their taxes.



15 thoughts on “Is Greece growing more quickly than the UK?

      • It is scandal of the highest order what the ECB has done to Greece and this article is a good example of how poorly economics is treated by even mainstream business publications. Of course Bloomberg (like the FT) has an axe to grind on UK, having opposed Brexit. So all potential poor comparison of the UK vs Europe are highlighted. I My favorite one recently was the FT pointing out the poor UK performance on productivity vs many European economies so of course we need to stay in Europe. Of course this is most likely due to the high labour participation in the UK vs those economies, the UK is able to find work even for the least productive people. But if it were a problem, how could Europe be a solution? Britain has been in Europe since 1973 without this being resolved.

  1. Crikey I had forgotten about Richard Hell and the Voidoids! Now, what was that other band called fro around that era, was it Matthew Winkler and the Economic Revisionists?

    How can such an august person write such utter drivel. Have they no sense of perspective?

    • Hi Andy

      I have continued to sing that song to myself from time to time. sometimes it just feels apt! I haven’t heard it on the radio for ages and ages though.

      The article must have been an attempt to deceive the unwary as it was guilty of cherry picking hoping that readers would be unable to put it into context.

    • Hi Steve and thanks for the link.

      I found this bit a little curious.

      “The timing couldn’t have been better as the Syriza government in Athens is hoping that Greece will be given access to ECB’s Quantitative Easing program or some form of debt restructuring — their last chance to re-election.”

      Even if Greece gets QE it will be too late to get much as the programme is in the process of being wound down. So the gains would not be great and even ramping it back up would still in my opinion leave Greece with higher bond yields than it could fund off the European Stability Mechanism . Also with the ESM owning so much Greek debt now how would a restructuring work?

      ” The loan packages from the ESM and EFSF are by far the largest the world has ever seen. The two institutions own half of Greece’s debt. “

    • Hi Chris

      For now with some economic growth and the insistence on a deficit surplus Greece should be okay. But as time goes by the cost of actually having to fund its own debt rather than borrowing cheaply off the ESM will be like a deadweight on Greece. That could suck it back down again.

  2. You find the narrative on Greece “stunning” I’ll see that and raise you to disgusting. The situation in Greece is being forced to fit a narrative that the Euro works and that a non sovereign country can cut it’s way to prosperity. If there was one cause I’d die in a ditch for it would be against joining the Euro under any circumatances.

    I wish the Greeks well but they have a whole world of pain to go through to recover if they ever can in the Euro which I doubt. PS. Richard Hell, nice one! That’s what I call raising your game.

    • Hi bill40

      I feel very sorry for the ordinary Greek who has been lied to on an industrial scale and now has the face the consequences of the mess created. It will take years and maybe decades to sort this out. “Shock and Awe” indeed.

  3. I will quote you what my Greek friend said as a comment on this: ‘A RollsRoyce and a Trabant set of towards the same destination. The Rolls soon has to pull into a gas station to refuel but the Trabant keeps chuffing along in a cloud of blue smoke. Technically at that point in time the Trabbant is going faster than the Rolls! But which car would you rather travel in?

    I think that sums it up nicely!

  4. Bloomberg, along with the FT, are Remain central where their critical faculties really are tainted by that one viewpoint. Anything to make the UK look less successful is to be pounced on. So comparing UK to Greece in a negative fashion is very attractive. I don’t even think they are truly conscious of what they are doing now. It is simply the psychological process of seeking out apparent data points to help reinforce one’s own world view.

    • FT is a disgrace.But this is what happens when you allow foreigners to buy your nations media.

      Can’t believe the Japs have changed too much in a couple of generations.

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