What a Brexit could mean for Greece

The British on Thursday voted to leave the European Union. A Brexit would have significant economic, social and political consequences for Greece, short- as well as long-term. More worrying, it could open the appetitive for a new round of speculation about a possible Grexit.

A Brexit would indirectly affect Greece on three different levels:

Economy

A devaluation of sterling could damage real estate, tourism and Greek exports, as well as the income of a large number of Greek households with students or workers in the UK. Take note of the following data:

1. Real estate: According to Algean Property, more than 100,000 foreigners, mainly from Europe, USA, and Australia (about 60 percent) currently own property in Greece. The recent weakening of the euro against the US dollar and the British Pound increased by 10 percent the attention of potential buyers based in the US and the UK. Thus, a weakening of the British Pound would decrease the interest in the Greek real estate market (residency, holiday, and hospitality market).

2. Tourism: An estimated 2.4 million tourists from the UK visited Greece in 2015. Tourism from the UK represents 10 percent of the total incoming tourism in Greece and 14.3 percent of total travel receipts (2 billion euros). The UK is the second biggest market for Greek tourism after Germany.

3. Education and employment: More than 400,000 Greek youths left Greece during the last six years to study or find work abroad. The UK is the most popular destination for education and employment among Greeks because of the English language (Greeks are taught English at school) and their EU citizenship that gives them access to education and jobs. Especially in the education sector, Greeks (as EU residents) are eligible for discounts. Should the UK leave the EU, thousands of Greek students will lose the discounts, need a visa for their education, and so on. Moreover, Greek employees will lose all their benefits as EU residents. This change could prompt a considerable number of Greeks to return to their home country or an increase in their living costs (in the case of youths, the costs are mainly covered by their families back in Greece).

Politics

Brexit could open the path for the next “exit” from the EU and the eurozone or, alternatively, end such speculation once and for all. The outcome depends on the day after in the UK, the EU and the eurozone.

A Brexit would put pressure on the bloc to decide whether it wants “more” or “less” Europe. This will affect the “core” of the European Union, i.e. the eurozone and more specifically Germany and France.

If the UK were to leave the EU, countries such as Denmark and Norway would be tempted to try to re-negotiate their relationship with the EU and the eurozone.

Should the catastrophic scenarios not materialize, and should the country continue to attract investments, create jobs and growth (following some relatively short adjustment period), this would again open the discussion on “exits” especially among big and autonomous economies like Italy. However, speculation about Grexit would surface again, even though the Greek economy is not as big and autonomous as the Italian one. A Grexit would be a likely scenario for two reasons:

1. Greeks are exhausted after six years of tough austerity measures.

2. Greeks would also see Grexit as a potential solution to the refugee crisis.

In this case, Greek and eurozone politicians would re-negotiate political and economic ties from scratch, including the bailout programs, the issue of debt, and the refugee crisis. Moreover, other “exits” cannot be ruled out.

On the contrary, if Brexit proves to be a bad decision, triggering big economic, social, and political problems for the UK, then Euroskepticism will largely disappear.

Society

Greek society will be affected in two ways:

1. Greeks will lose one of their most popular alternatives for employment and residency. It is worth noting that the time candidates need to wait to sit exams for language skills certificates at Athens's British Council that would allow them to seek an education or to immigrate to the UK has increased from one month before the crisis to two or even three times that.

2. Many Greek students and employees in the UK will be forced to repatriate. Other English-speaking countries (like USA, Canada, or Australia) are less attractive alternatives. These countries are further away from their homes and the cost of education (especially in the USA) is higher. A large number of Greeks abroad would be forced to return to unemployment-hit Greece. Greece would have to receive a fresh wave of “migrants” - this time Greek nationals.