Before Brexit, there was Grexit. In 2009 Greece admitted that its budget deficit was more than four times the limit imposed by the EU, and its lenders began to fear that the country, unable to service its debt, would have to exit the euro and reinstate the drachma.
Credit ratings agencies swooned, lenders panicked and the country’s bond yields – and therefore the cost for it to borrow money – climbed precipitously. By the time the crisis was over in the mid-2010s, the fears had spread to the so-called PIIGS countries: Portugal, Italy, Ireland, Greece and Spain (and Cyprus). All had taken bailouts to keep up their debt repayments except Italy, which only narrowly avoided having to do so.
Subscribe to The New Statesman today from only £8.99 per month
Content from our partners
