Greece is to embark on a fresh round of spending cuts for pensions, salaries and healthcare next year, before (hopefully) returning to modest growth in 2014. The government’s draft budget, submitted to parliament yesterday, predicts the economy will shrink by up to 4 percent in 2013 (which would mean a total contraction of a staggering 25 percent since the crisis began in 2008).
This isn’t the first time we’ve glimpsed light at the end of the tunnel, of course. This time last year, the IMF and OECD were each tentatively predicting a return to growth by the first half of 2013. Evidently, events have not worked out as hoped. However, perhaps we can say the worst really is over for Greece? Thanks to the backstop of the ECB’s bond-buying programme, along with the recent German Constitutional Court ruling and a tough new Greek budget, is the end finally in sight?
The coalition government of Prime Minister Antonis Samaras hopes this latest budget will pursuade Greece’s creditors to disburse the next tranche of bailout money at the upcoming EU summit on October 18-19. If the necessary funds are not released on time, Greece could find itself forced into default as early as November.
The focus of the Eurozone crisis, however, may now have turned elsewhere. The latest reports indiate that Spain may be considering a formal eurozone bailout as early as next weekend (though Germany is rumoured to have asked for the decision to be delayed so that the vote on bailouts for Greece, Spain and Cyprus can go through the Bundestag all together in a single package rather than one by one).
So, is the worst over for Greece? Last month, regular Debating Europe commenter Christos took part in a live debate with Commission President José Manuel Barroso as part of a cooperation between Euronews and Debating Europe. Christos asked President Barroso directly:
What next for Greece now? The austerity measures have brought the country to its knees, both socially and financially. Are we anywhere near the end of the tunnel?
You can see President Barroso’s response in the video below:
What do YOU think? What next for Greece? Will yesterday’s draft budget, including fresh cuts for pensions, salaries and healthcare, be enough to set the Greek economy on a sustainable path? Is there a light at the end of the tunnel? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.