GREECE: Business owners say a switch from the euro currency to the drachma would destroy them, especially those that buy their products in euros / Citizens also express fear their money will become worthless

Record ID: 711318

  • Title: GREECE: Business owners say a switch from the euro currency to the drachma would destroy them, especially those that buy their products in euros / Citizens also express fear their money will become worthless
  • Date: 31st May 2012
  • Summary: ATHENS, GREECE (MAY 29, 2012) (REUTERS) PEOPLE IN COMMERCIAL STREET WALKING PAST SHOPS SIGN IN THE SHOP WINDOW SHOWING PRICE REDUCTIONS AND SALES WOMAN LOOKING AT SHOP WINDOW (SOUNDBITE) (Greek) ELINA SPILIOPOULOU, 28, CIVIL SERVANT, SAYING: "Even now that I get paid in euros as a civil servant, its hard to makemeet so I don't know with the drachma what the consequen
  • Embargoed: 15th June 2012 13:00
  • Keywords:
  • Location: Greece
  • Country: Greece
  • Topics: Business,Economy,Politics
  • Reuters ID: LVA4ZJ6T245OQUKDG99DTZ8AGLXQ
  • Story Text: Tsirikos Bikes in northern Athens is one business that is going well in the midst of the crisis - a big change from the tens of thousands of businesses suffering or already closed down.
    Vassilis Tsirikos took over Tsirikos Bikes from his father who opened the shop 35 years ago. But while other businesses have died out due to the recession, bicycle sales have increased since the crisis began; as more people are leaving their cars at home to avoid paying for gas and instead taking up bicycles as a cheaper option. He says the bicycle business in Greece has increased nine percent in the last few years.
    But Tsirikos says a change to the drachma is a step into the unknown. He imports bicycles from Europe, such as Germany, Italy, France, buying them in euros.
    "I can't imagine what this scenario with the drachma will mean for us in the bicycle business. We have Greek products we could sell, but I imagine it will be very expensive and very difficult to import bicycles from abroad, which even now there is difficulty because despite this difficult time of uncertainty the merchandise has to be pre-paid. We could order them, pre-pay them, but we won't know if we will be able to sell them afterwards at this new price if the currency changes to the drachma," he told Reuters.
    Besides the impact on imports and prices, Tsirikos says with the drachma his current luck could completely run out, as people who have abandoned cars in the current crisis could abandon even the bicycle if the drachma was introduced.
    "There is an uncertainty in which we don't know how consumers will react, or how much the bicycle will still be an alternative option then. After people might just start walking or not go anywhere at all!" he said.
    Pavlos Tsaramiadis has been in business since 1956 when his father first opened the shop selling imported motorcycles and scooters from Italy.
    Motorcycles and scooters such as Italian Vespas are regularly used for daily transport in Greece. But in the last two years, sales have been down 30 to 40 percent. Many motorcycle shops have shut down.
    "Business has really fallen, people don't have money, banks don't give loans, even the service department has no work. Customers will hesitate for even a service job costing ten or fifteen euros," said Tsaramiadis.
    "I believe we must not go to the drachma. I believe it will be a catastrophe. From the things I hear, - because I have not experienced such a thing - it will surely be a catastrophe if we go to the drachma," he added.
    Since the economic crisis began in 2010, tens of thousands of businesses have closed down due to the fall in consumption caused by economic measures implemented that reduced jobs and wages. The measures deepened the recession and businesses could not survive, burdened also with increased taxes and were forced to shut down.
    The recent political developments where a government could not be formed in the last elections, and the rise of a far-left party that opposes austerity measures demanded by international lenders, has caused concerns that after the repeat election on June 17, the party in power may not commit to the reforms.
    The reforms are the terms demanded by the European Union and International Monetary Fund in order for Greece to keep receiving financial aid, which is keeping the country afloat, and would risk Greece's future in the eurozone and euro currency. If Greece was forced to leave the euro it would have to revert back to its old currency, the drachma, at a largely devalued rate.
    Many analysts have said a return to the drachma would be catastrophic for the economy, which would dramatically affect imports, exports, bank deposits, loans and prices. Citizens already suffering from reduced wages and job losses are terrified by the prospect that their savings and wages will shrink while loan payments and prices would increase.
    "Even now that I get paid in euros as a civil servant, its hard to makemeet so I don't know with the drachma what the consequences will be then." said Elina Spiliopoulou, a 28-year-old civil servant.
    "I don't have any bank deposits so I am not afraid of losing them, I own my house fortunately so I don't have to get a loan, but If I had to get a loan I would be frightened, Imagine what will happen to those people that have taken out a loan in euros if we go to the drachma, I am sure we can just imagine." said 48-year-old Spiros Batsios, a court clerk.
    "Returning to the drachma will be a step backwards. But with these policies that are being followed, we are going to end up there." said Vassilis Siakoulis, a 30-year-old clerk at a bank.
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