Major Greek lender warns of disastrous consequences of Greek exit from eurozone

Leading Greek lender National Bank today warned that a Greek euro exit would disastrously affect living standards and create a nightmarish effect on unemployment and inflation.

"A euro exit would lead to a significant drop in living standards for Greek citizens," it said projecting a 55-per cent fall in per capita income and a 65-per cent fall in the new currency's nominal value.

 It points out that unemployment would shoot up to 34 per cent from 21 per cent currently, while inflation would "initially" explode to 30 per cent and keep rising.

It added, Greece would also end up reneging on most of its debt to foreign creditors. It further warned of ''even worse'' effects in the event of an uncontrolled exit from the eurozone.

Prospects of a Greek euro exit are being talked about following an inconclusive 6 May election which sent a stern message to political parties applying an unpopular EU-IMF recovery plan. A Greek radical leftist party, which pledged to tear up the plan found ready takers for its rhetoric among angry voters, and emerged as the second largest party in the parliament. It is now seen a possible victor in a new ballot scheduled for 17 June.

European leaders have held out the threat of a loan freeze if Athens failed to complete structural reforms pledged in return for the multi-billion rescue package.