The EC has conditionally endorsed Prime Minister George Papandreou's austerity plan to bring the country's 12.7 per cent budget deficit back below 3 per cent by 2012. But the move came only after Athens beefed up its package to include increased fuel tax and a public sector pay freeze: measures that carry somewhat more weight than the previous undertaking to sell off state assets and clamp down on tax evasion.
While it is notable that the EC has put no actual money on the table, its backing implies that, if the Commission's monthly monitoring showed that Greece was assiduous in implementing these measures, some fudgy form of material support would be forthcoming. Meanwhile, the risk of a default on Greece's debt - whether it becomes a catalyst to a bail-out or not - still looms large.
Market reaction has been lukewarm. In similarly straitened circumstances Ireland's retrenchment plan has been widely credited as feasible, whereas Greece still has a credibility gap when it comes to its statistics on debt and deficit. Paste onto this the powerful union movement in Greece, with its ideological claim on the socialist government, in combination with the propensity of disaffected citizens to take to the streets, and there is not much reassurance in these new developments.
All this is reflected in the lack of appetite for Greek government bonds which, even after moderation in the wake of the EC's announcement, are being punted out with yields of more than 6.5 per cent from the benchmark 10-year paper. To put this in context, Germany's equivalent bund pays 3 per cent.
Any worsening of Greece's bond crisis will inevitably have a serious impact on the wider economy and, even if they succeed, the austerity measures are arguably as bad as the default they are intended to stave off.
There are 58 funds in the IMA Europe ex-UK sector that have exposure to Greece, and pre-eminent among these is equity-focused Artemis European Growth, with a 7.5 per cent weighting.
Performance of funds vs sector over 1-yr
Source: Financial Express Analytics
According to Financial Express data, the fund moved into the rehab zone over the 12 months to 24 February, posting a gain of 31 per cent - a turn-around from the 34 per cent that it dropped in the three years to date.
Even so, whether or not the relatively large position on Greece is the root cause, this performance is well off the pace. That is set by Invesco Perpetual's European Opportunities fund, which piled on a gain of 112 per cent over the year to date, and has remained solidly in positive territory since.
The fund does not figure in the roll of funds with exposure to Greece, and it would be surprising if Artemis's experienced Europe hands, Philip Wolstencroft and Peter Saacke, were not taking a long hard look at this element in their £419m portfolio.
Performance of MSCI indices over 1-yr
Source: Financial Express Analytics
In the EU as a whole, growth is expected to languish at a desultory 0.4 per cent this year. The upturn is largely attributable to a modest rise in export activity, while domestic demand remains poor. This is likely to remain the case as the massive interventions on the part of governments unwind and this source of liquidity dries up. Banks are still not fully re-capitalised and cannot pick up the funding requirements of normal activity.
The situation is compounded by a problem of competitiveness. This may not have been a pressing issue in the good times - payrolls, people's entitlements and generous social provision could all grow apace. But any dependency on exports to provide a ladder out of the hole is now up against a global scrabble to do it better and cheaper.
This is where southern Europe, in particular, comes a cropper, and if the outlook appears far from rosy for those who partied on the profligate policies of the past, spare some sympathy for Germany, which would do well to brace itself for a deep dip into its lederhosen to bail them out.
This article first appeared in Investment Adviser