Leading economists warn Merkel that 'austerity has failed' in Greece

Five of the world's leading economists have written an open letter to German Chancellor Angela Merkel warning her to stop "force-feeding" the Greek people "never-ending austerity," and say that doing so risks destroying "the eurozone as a beacon of hope, democracy and prosperity".

The authors of the open letter, published in several European newspapers yesterday, include Thomas Piketty of the Paris School of Economics and best-selling author of Capital in the Twenty-First Century, and Jeffrey D Sachs from Columbia University.

The economists argue that "the medicine prescribed by the German Finance Ministry and Brussels has bled the patient, not cured the disease" and say that the humanitarian impact on Greece has been "colossal", with 40% of children in poverty, infant mortality skyrocketing and youth unemployment close to 50%.

"The Greek government is being asked to put a gun to its head and pull the trigger," the authors say. "Sadly, the bullet will not only kill off Greece's future in Europe. The collateral damage will kill the eurozone as a beacon of hope, democracy and prosperity, and could lead to far-reaching economic consequences across the world."

The letter also argues that austerity has led to a depression in Greece not seen in Europe since the 1920s, and the economists advocate restructuring and reducing Greek debt, in order to "give the economy breathing room to recover, and allow Greece to pay off a reduced burden of debt over a long period of time".

"The Greeks have complied with much of Angela Merkel's call for austerity – cut salaries, cut government spending, slashed pensions, privatised and deregulated, and raised taxes," the letter goes on. "But in recent years the series of so-called adjustment programmes inflicted on Greece and others has served only to make a great depression the like of which has been unseen in Europe since 1929-33."

"History will remember you for your actions this week," the letter warns Merkel. "We expect and count on you to provide the bold and generous steps towards Greece that will serve Europe for generations to come."

The letter comes in what is a crucial week in the Greek debt crisis saga. Last Sunday, a snap referendum called by the Greek prime minister Alexis Tsipras resulted in a momentous 'no' result to creditor's demands for more austerity.

Today, Tsipras addressed the European Parliament in Strasbourg, urging MEPs not to let Europe fragment.

He was greeted by both boos and cheers, and said he was "confident" that his government could meet "its obligations in the interests of Greece and the eurozone" over the next few days, reports the BBC.

Greece must present new proposals by the end of Thursday to reach a deal with creditors and keep to Greece within the euro. A full European Union summit will be held on Sunday.

The letter was also signed by Heiner Flassbeck, former state secretary in the German Federal Ministry of Finance, Dani Rodrik of the Harvard Kennedy School and Simon Wren-Lewis of the Blavatnik School of Government and University of Oxford.