Credit markets don't trust Greece to stay in the euro

Could be a mechanical grexit? A mecha-grexit?

Via Pragmatic Capitalism comes this mildly alarming note from research group Capital Economics:

Recently, the problem of tight credit conditions have been exacerbated by domestic and foreign firms becoming more unwilling to sell goods to Greek customers unless they are paid for up front. In other words, credit risk is stopping some transactions from taking place. What’s more, some foreign buyers of Greek goods and services are delaying payment, in case Greece exits and the size of their bill (in euro-terms) drops.

Meanwhile, the bank jog continues. And Capital Economics predict 2012's contraction to be three points worse than the EU's forecast, and 2013's to be seven points worse.

All of which is to say that the political aspect of the situation is getting less and less relevent. If investors, trade partners, and, yes, Greek citizens themselves carry on behaving as if Greece has already confirmed it is exiting the euro, there is every chance that a they may create a self-fulfilling prophecy. Earlier this month, Paul Mason explained how bank withdrawals can force such an event, and its not hard to see how entirely cutting Greece off from credit or international trade would do the same thing (although slightly less mechanically).

The difference for the Greek people between a politically motivated exit and a economically forced one is likely to be small, of course. But for the broader continent, particularly the rest of the periphery, the latter presents a much higher chance of contagion. Because if a country can end up outside the eurozone despite its leaders, then there doesn't seem much that, for example, Rajoy could say to save Spain at all. Actions must speak louder than words.

Alexis Tsipras, head of SYRIZA, leaves the presidential palace in Athens. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Theresa May's "clean Brexit" is hard Brexit with better PR

The Prime Minister's objectives point to the hardest of exits from the European Union. 

Theresa May will outline her approach to Britain’s Brexit deal in a much-hyped speech later today, with a 12-point plan for Brexit.

The headlines: her vow that Britain will not be “half in, half out” and border control will come before our membership of the single market.

And the PM will unveil a new flavour of Brexit: not hard, not soft, but “clean” aka hard but with better PR.

“Britain's clean break from EU” is the i’s splash, “My 12-point plan for Brexit” is the Telegraph’s, “We Will Get Clean Break From EU” cheers the Express, “Theresa’s New Free Britain” roars the Mail, “May: We’ll Go It Alone With CLEAN Brexit” is the Metro’s take. The Guardian goes for the somewhat more subdued “May rules out UK staying in single market” as their splash while the Sun opts for “Great Brexpectations”.

You might, at this point, be grappling with a sense of déjà vu. May’s new approach to the Brexit talks is pretty much what you’d expect from what she’s said since getting the keys to Downing Street, as I wrote back in October. Neither of her stated red lines, on border control or freeing British law from the European Court of Justice, can be met without taking Britain out of the single market aka a hard Brexit in old money.

What is new is the language on the customs union, the only area where May has actually been sparing on detail. The speech will make it clear that after Brexit, Britain will want to strike its own trade deals, which means that either an unlikely exemption will be carved out, or, more likely, that the United Kingdom will be out of the European Union, the single market and the customs union.

(As an aside, another good steer about the customs union can be found in today’s row between Boris Johnson and the other foreign ministers of the EU27. He is under fire for vetoing an EU statement in support of a two-state solution, reputedly to curry favour with Donald Trump. It would be strange if Downing Street was shredding decades of British policy on the Middle East to appease the President-Elect if we weren’t going to leave the customs union in order at the end of it.)

But what really matters isn’t what May says today but what happens around Europe over the next few months. Donald Trump’s attacks on the EU and Nato yesterday will increase the incentive on the part of the EU27 to put securing the political project front-and-centre in the Brexit talks, making a good deal for Britain significantly less likely.

Add that to the unforced errors on the part of the British government, like Amber Rudd’s wheeze to compile lists of foreign workers, and the diplomatic situation is not what you would wish to secure the best Brexit deal, to put it mildly.

Clean Brexit? Nah. It’s going to get messy. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.