Violent clashes in Athens
The strict austerity measures implemented by the Greek government have sparked large protests in Athens.
According to Reuters, on Wednesday the 11th of May 3,000 people took to the streets, which resulted in several violent clashes between protesters and riot police.
The majority of the protest passed off peacefully, but a minority broke away from the main group and began throwing stones at the police.
According to the police, 17 demonstrators and 2 police officers were hurt as a result of these clashes. Three Greek policemen have since been suspended due to a police brutality investigation that began after a video of the violent altercations appeared on Youtube.
The protests in Athens relate to the tax increases and spending cuts that are at the core of Greece’s fiscal reorganisation, which is being overseen by the EU.
These events have increased fears that Greece could default on its 110bn Euro bail out package. This has resulted in the Euro losing value against the dollar.
According to Euronews, 250,000 civil servants took part in a strike against austerity measures in Portugal on the 6th of May and there were similar protests in Ireland following its bailout in November of last year.
If the debt of these countries cannot be restructured in a way that facilitates economic growth, they will become an even larger financial burden on the already ailing European Union.
The serious opposition to cuts casts doubt over whether austerity is an effective means of getting economies back on track.
Severe cuts in places like Greece, Ireland and Portugal could result in economic stagnation, which could put the European Central Bank in a more vulnerable position.
Speaking to Bloomberg, Nobel Prize winning economist Joseph Stiglitz stated “[austerity] doesn’t work, it does not lead to more efficient, faster growing economies.”
For risk managers, further anti-austerity protests around Europe could serve as an indicator of consumer dissatisfaction and the general economic health of the Eurozone.
