Monday was groundhog day in the eurozone. A year after the European Union and the International Monetary Fund unveiled a €110bn rescue package for Greece, the country is again at the top of the crisis agenda. The bail-out has not eased Greece’s economic problems while exacerbating its indebtedness problem; the country’s re-entry to the debt markets as a sovereign borrower early next year, envisaged in the bail-out plan, looks impossible. The eurozone had a choice at an emergency weekend meeting. It could expand the bail-out or allow Athens to restructure. It chose the first option. The second cannot be avoided for much longer.

A Greek restructuring is not only inevitable, it is essential. To avoid having to restructure, Athens would have to implement even more comprehensive structural and social reforms than those that have already caused civil unrest, as well as a frankly unrealistic pledge to privatise €50bn of state assets by 2015. Greece needs to execute these measures if it is to exit its crippling crisis eventually, but they should not be done in firesale circumstances.

The issue for policymakers in Brussels, Frankfurt and Athens is one of timing. Deutsche Bank puts the likelihood of a credit event (default or restructuring) in Greece at 46 per cent within two years and 72 per cent within five, based on sovereign credit ratings, credit default swap spreads, and a 40 per cent recovery rate. (For Ireland, the likelihood is 24 per cent and 44 per cent, and for Portugal it is 22 per cent and 43 per cent.)