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Directors on edge as three-quarters of business leaders think Greece will leave Euro within the year

05 Jul 2015

A new survey of UK business leaders reveals that three in four IoD members think it’s likely Greece will be forced to leave the European single currency within the next twelve months, against only 2% who think it is very unlikely.

The most probable outcome of “Grexit”, IoD members say, is a messy default which negatively affects financial markets and creates pressure on other Euro members. This outcome was considered likely by nearly two-thirds of the business leaders surveyed, while 45% also think there was a risk of widespread bank runs in other southern European countries. Longer-term, 45% of members say there is a good chance “Grexit” will be followed by other countries leaving the Euro.

While the direct exposure of IoD members to Greece is limited, with 77% having no business interests in the country, nearly half think that a Greek exit from the Eurozone would have a negative impact on the UK.

Full tables of the survey results are below.

Commenting on the results, Simon Walker, Director General of the Institute of Directors, said:

“British businesses are nervous about the potential knock-on effects of “Grexit” on the UK economy. They have reduced their direct exposure to Greece in recent years, but are worried that a messy divorce from the single currency would shake markets across the continent and destabilise the already fragile economies of other southern European countries. IoD members do not expect the chaotic situation in Greece they see on the evening news to end anytime soon.

“There is a heated debate going on about whether it would be better for the Greek people if they left the Euro, but it’s clear that their decision at the referendum on Sunday has significant implications for the whole of Europe.”

Full survey results

The IoD received responses from 847 members between 24th June and 3rd July 2015.

Q. To what extent do you believe Greece’s withdrawal from the euro[zone] is likely or unlikely over the next twelve months?

Very likely

221

26%

Somewhat likely

401

47%

Neither likely nor unlikely

43

5%

Somewhat unlikely

154

18%

Very unlikely

15

2%

Don’t know

13

2%


Total

847

Q. How much of an impact – direct or indirect – do you think a ‘Grexit’ would have on the UK economy?

Strong negative impact

20

2%

Somewhat negative impact

389

46%

Neither negative nor positive

325

38%

Somewhat positive impact

80

9%

Strong positive impact

6

1%

Don’t know

27

3%


Total

847

Q. What do you consider some of the likely outcomes of a ‘Grexit’ to be?

A messy default and exit which negatively affects financial markets and leads to pressure on other Euro members

529

62%

A Greek default within the euro, but with muted effects on the wider Eurozone

323

38%

Greek economic recovery based on a competitive revaluation and exports

223

26%

The imposition of heavy capital controls by the Greek government

406

48%

More widespread runs on southern European banks

381

45%

The remaining Eurozone becomes stronger and more integrated in the longer term

196

23%

Other

31

4%

Don’t know

22

3%


Total

847

Q. To what extent do you consider that a ‘Grexit’ will ultimately be followed by other countries leaving the euro?

Very likely

45

5%

Somewhat likely

341

40%

Neither likely nor unlikely

138

16%

Somewhat unlikely

232

27%

Very unlikely

75

9%

Don’t know

16

2%


Total

847

Q. What kind of exposure does your business have to Greece?

Clients in Greece

79

9%

Clients in other countries with operations in Greece

39

5%

Subsidiary or joint venture operation in Greece

12

1%

Direct investment in Greek enterprises

3

< 1%

Contracts with Greek enterprises

20

2%

Assets in Greece

6

1%

Imports from Greece

6

1%

Staff in Greece

12

1%

Other

21

2%

Don’t know

54

6%

None of the above

654

77%


Total

847


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