Greek deal does not eliminate break-up risks

On the face of it, recent developments like the Greek debt restructuring deal and the ECB’s liquidity operations appear to have strongly undermined our view that a limited form of euro-zone break-up will commence this calendar year, most probably with the exit of Greece. But our position has always reflected deeper concerns over the underlying economic and fiscal pressures within the currency union. And for now at least, those pressures seem as strong as ever. When the fundamental facts in the euro-zone change, we will follow Keynes and change our minds. But we don’t think that point is upon us.