Britain and the Euro Zone - Essay Example

Economically, Greece is ranked 32nd largest in the globe at around 312 billion U.S. dollars by nominal gross domestic product going by world bank statistics for the 2009-2010 financial year. Greece is ranked the 15th largest economy in the European Union, an organization that has 27 members. Greece was formally admitted, in June 2000, as a member of the Economic and Monetary Union of the European Union, commonly referred to as the Euro Zone. Amid reports of deliberate financial accounting records manipulation and misinformation practices, Greece has been subject to the worst crisis since 1974 (Lynn 2011).

The Greece government revised its prediction of deficit from 3.7% to 12.7% of the GDP in 2009. In May 2010, the government’s deficit rose to a whooping 13.6% of the GDP – on e of the world’s highest. In November, 2010, Greece’s government deficit was estimated at close to 15.5% of the country’s GDP, public debt being set at close to 127% of the GDP (Ingrid and Papchristou 2009). Effectively, this is the largest deficit amongst the European Union member countries. As a result of this situation, international confidence in the country’s ability to pay back its debts got into a serious crisis.

Following Greece’s deplorable and pitiable situation, the International Monetary Fund and the European Union offered an austerity package much to the fury of the Greek nationals. The situation has further led to public unrest and riots (Charter 2010). The European Central Bank in a bid to lift Greek back to its feet released a bailout package aimed at lowering the country’s public debt mountain (Lynn 2011; Castle and Ewing 2012). The measure was instituted after a balance was struck between the central bank’s adherence to EU laws and helping depressed EU governments.

EU law forbids the central bank from offering monetary financing to the governments. In respect of the same, the ECB