Why Germany will block Grexit

The likelihood of a Greek exit from the eurozone this year is only around 25%, well below investment banks' consensus forecast of 50% to 70%, top commentators have said, with Germany set to prevent a ‘Grexit' before its own elections in 2013.

Although European markets have been in freefall in the past month over concerns Greece faces a disorderly exit from the single currency, Ignis’ Stuart Thomson, Skandia’s Rupert Watson and Threadneedle’s Dave Dudding said it is not in any economy’s interest to allow an exit. Chief economist Thomson put only a 25% probability on Greece departing the eurozone in the near term, as he expects Angela Merkel, the German Chancellor, will only operate in Germany’s interest. “Merkel does not want to be forced to address Europe’s over-indebtedness before the German election, which is scheduled f...