Germany is drawing up plans for Greece to leave the Euro.

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www.telegraph.co.uk/finance/financialcrisis/9091021/Germany-drawing-up-plans-for-Greece-to-leave-the-euro.html

What impact will this have on us?

Directly, not a huge impact. Wouldn't have thought Greece is a massive consumer of British goods or even vice versa. British banks and other financial institutions have investments in Greece, but not enough to cause them a problem. We could potentially get more Greek people wanting to live and work in the UK or ex-pats returning. Indirectly, it depends on what Greece leaving the Eurozone would do to confidence in the entire project. It could be seen as a sign of weakness which would reduce confidence and throw attention onto other weak economies. Or it could be seen as a sign that the Eurozone is shedding dead wood, and strengthen confidence.

It would probably have quite an effect on France, whose banks I believe are quite heavily exposed to Greek debt. What the knock-on effects might then be, and to what extent it would affect us, is very hard to predict.

I think the most profound effect might be to halt the general feeling of inevitability and irreversibility of the EU integration project. It has long been regarded as an inviolable principle that powers given to the central apparatus of the EU can never be returned (the "acquis communautaire") so that the whole "ever closer union" idea as stated in the original Treaty of Rone is like a ratchet that only goes in one direction.

If one country is allowed to leave the Euro this principle is breached. If Greece left, defaulted, devauled and after a while started to become competitive and bounce back (as Iceland, with its own currency, is now starting to do) then other countries might want to follow suit.

See here
www.telegraph.co.uk/finance/financialcrisis/9092320/Germany-bows-to-global-pressure-and-signals-Greek-rescue-deal.html though.

I thunk Greece should leave the Euro, though perhaps not the EU - there is afaik, no precedent that they would have to leave the EU if they reverted to the drachma; after all, the UK is in the EU, as are various other countries, but without the Euro.

I'm a returning expat, Cogito, bringing children and dh who have previously only ever lived in Greece

I think the effect on the UK will be from the euro - the pound will be affected by whether it goes up or down, and whether larger UK export markets (such as France) are adversely affected by this.

Even if they do reach another bailout agreement today or tomorrow, in the long run it's not going to work, it's going to come up again. A Greek default is still very much on the cards, whatever bailout is agreed now.

There's certainly an argument that Greece - and some other countries - should leave the Euro. Its a bit suprising that the Germans should be drawing up the plans - the Euro was their way of gaining an artificially low currency.

Greece is the albatross scuppering the currency, Grimma. Of course, if Greece does return to the drachma, one has to wonder what will happen in other countries suffering economic crises, like Italy, Portugal and Spain. Will they follow suit?

I think one point that has to be borne in mind is that the Euro was not essentially an economic project but a political one.

The conditions for entry were fudged. The only two countries that satisfied the strict criteria for entry were Luxembourg and the UK and we didn't join anyway. The others just massaged the figures.

Currency Unions can't really work without political unions and certainly can't work with widely divergent economies.

My feeling is that many of the original movers of the project were quite aware that it would lead to terrible problems in the future, to which increased centralisation of power to Brussels could then be put forward as the solution.

To some extent they have got their wish, with EU-appointed puppet governments now in place in Greece and Italy, and the EU basically running the Irish economy.