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.
no the worst is still to come.
They would be in balance in their own mess.This is what hepapns when you spend beyond your means.This is what hepapns when you are raised thinking you are entitled & that someone with better restraint than you should pay for their own excesses.This is what hepapns when you take from the producers, forcibly, and give to the wasters.Rather, charity & willful giving, which the government should encourage by religion (hey, how about the Bible?) should be the path to solving society’s needsNot more taxes, more spending.You don’t give heroin to an addict.
Everyone is quite disappointed by what is going on and at the moment is quite difficult to see the light at the end of the tunnel…. We all hope but…….
I don’t think that all those loans from the IMF are the solution and tne banks are to be blamed for the current crisis as well.
The whole “Greek bail out” story started as a tragedy but is turning in comedy. At the end it’s just philosophical. To clear things up:
Question: Why was greece bailed out in 2010?
Answer: Because greeks are beautiful? Because of sirtaki? Because greece is tha cradle of Democracy, civilization, of the western world as a whole? NO. Greece became insolvable and it was bailed out because huge part of the greek debt was held by german and french banking institutions which, if greece got bankrupt, would suffer losses that they couldn’t afford.
Result: It was not Greece who was saved, but the french/german banks that held greek obligations. In reality, taxpayers from all around Europe gave their money to save some banks.
Question: What is going on since then?
Answer: Pretty much nothing. The bail out money is sent to an account in Luxemburg, from where it is transfered to the detainers of the greek debt when their obligations become mature. Greece is left alone trying to survive by its own in an concurrencial entrepreneural environment where Greece has a continuously worse brandname/reputation every day that passes because of populist micro-political statements having to do with internal politics of each member state. On the meantime the EU-ECB-IMF Troika demands from the failed state of Greece spending cuts before each tranche of the bail out money is released. Spending cuts result in continuous contraction of the greek economy, something that is of course logical. Nevertheless, the specialists of the Troika that can “predict” that the greek debt will be at 120% of the greek GDP in …2020 (! -how do they do that? :D ), everytime fail to predict that spending cuts result in further recession which then results in more spending cuts, so even more recession etc etc, and so it goes on..
Result: Greece is in its 5th year of recession (something that has never happenned in any country in the world in times of peace!) and the appropriate term to describe the economic propects is “economic free fall”. The country is locked in an exonomic prison where the rules are simple: Bail out money goes to creditors and Greece has to rely on its own forces and cut spending. Spending cuts result in the described above cuts->recession->cuts->recession death spiral. At the same time, since killing an EU country was so easy after all, speculators attack other countries. Portugal, Ireland, Spain, Italy. Why wouldn’t they, it’s a 100% surebet!
Long story short, EU should have rescued greece under no conditions, Greek GDP was just 3% of the EZ GDP and the whole joke would have ended there. For reasons that probably have to do with short minded economic interests or even moralistic feudal ideologies in the EU core, EU didn’t do so. Now let’s seet back comfortable in our chair and watch EZ break appart in nationalistic violence.
Just to throw away anyone’s illusions that I’m exagerating and that things can’t be that bad, there’s always hope etc etc I’ll just state some facts:
a) Schools, hospitals are closing. Is there anyone who really believes that this will bring us back to growth? How? With more uneducated people and others dying because they can’t find their cancer medicine neither in the hospitals nor in the pharmacies?
b) Most Greek medium and small enterprises owners failed or will fail in the following months. Not only they have help from nobody, not only their abroad counterparts demand them all the money front (cash) before any transaction because they fear that greece can go bankrupt any day (anyone intrested in doing business under such conditions? -wait, there is more) but the (failed) greek state can’t even pay them back money that it owes to them (it’s about 7 billion euros at the moment)
c) Greek Banks are bankrupt as well. They are merging with each other trying to look better but the reality is that they are failed and they wait for the next bail out tranch that will serve for recapitalizing the failed banks. Which means that the banks will then (maybe) look good, but in any case they will not participate by any means in stimulating the economy.
d) Social costs. I won’t be very detailed in this because in any case EU technocrats don’t give a f@ck about social cost. But society is a big lab that produces effects. And among those at the present day u have students passing out at school because they are starving, nationalism that thrives especially in young ages because young people are not stupid, they see that there is absolutely no future for them so they choose the only option availiable, violence. Neo-Nazi party is already in the Parliament and, likewise the Weimar republic, is gaining in power day after day (15% according to polls and growing) and everything that has to do with culture is paralyzed or heads towards being inexistent.
Now try and think why the hell are we obliged to live all this? And you will see that, as i said from the beginning, the answers can be only philosophical.
Nice read, I just passed this onto a collaegue who was doing some research on that. And he just bought me lunch as I found it for him smile Therefore let me rephrase that: Thanks for lunch! We strain to renew our capacity for wonder, to shock ourselves into astonishment once again. by Shana Alexander.
Mr President I believe that financial problems for countries such as Greece, Spain, Portugal etc could be better resolved by more Europe, more economic and political integration. Has the comission drawn a plan for such actions other than banking union or eurobonds? Has the comission drawn a plan for a new european treaty (to replace Lisbon treaty perhaps) or consitution to be submitted to european citizens by referendum or other ways? I think the time is right for this action now
Could be the unfair atitude for romanians?…..
A Grécia esta no sexto ano debaixo das medidas de austeridade e com um perdão fiscal agora olhamos para o futuro da Grécia segundo os economistas a partir de 2015 as economias da zona do Euro começam a crescer sera que a UE e o FMI irão perdoar mais uma vez a sua divida ou os estados membros irão criar uma onda de solidariedade e mesmo assim os gregos irão ter um futuro pouco risonho
the only light that can shine at the end of that tunnel is the light of freedom.
Barrosso…… WHO voted for you? And as a Maoist you are an apologist for mass murder under that ideology. You are a dangerous political extremist who is unfit for high office. Now GO and take your pathetic EU with you!
unfortunately I do not see any light at the and of the tunnel.. simply because I haven’t seen any change of attitude in the European elites.. Even Holland did not keep his promises of “growth”.. It was all nonsense!! So until we see that “growth” stimulus and Europe changing attitudes as a whole, there is not going to be any end to the tunnel.. Greece is being made to pay for the debt of Europe, if we put it simply. We are saving the banks and the economy of Europe. Not ours… We are the weakest link and we are being told what to do by the major players. Their experiment has failed and someone has to pay, and that of course, as always is not going to be themselves!! Shame on them!!!
This may help shine some light on it.
catherine, your video is only showing one side of the story. rolls royce had a record year, but much of the profits came from the asian market
increased exports to china means more jobs for british workers.
The Journeyman documentary was not basing its expose on Rolls Royce the company, good or bad for Europe. Naturally, employment for all is what is desperately needed here presently. It was, in fact, highlighting the growth of disparity between the wealthy and the rest of our people during this collapse of the Capitalist system.
One of the good ways to get our European people back into full time employment would be for the rich to cancel the jobs taken in employing the ‘slave labour market’ to avoid European living wage obligations and tax avoidance. Europe doesn’t have an open figure to put here. But Greece is a good example for us to examine.
And those jobs that remain.
We are heading or have reached this.
Corporations based in tax havens with no accountability anywhere as a result of Globalization can only be fixed by changing the laws allowing them to abuse their standing.
And, of course, by the European markets drying up. As we are currently experiencing. Only the rich are buying but even they will run out of the need for additional Rolls motor cars. There isn’t enough of them to sustain it.
So, playing the game of, don’t expose the truth, is not one that will work for much longer.
Europeans must, en masse, stop allowing themselves, as a group, to be exploited by those who have decided that what we need is a new world order.
There maybe light at the end of the Greek tunnel if all those in power across the EU and its member states face up to the fact that yet another Greek debt restructuring (default) is necessary if they are to have any hope of climbing out of the hole they are in.
Whether it is politically palatable to restructure (default) on the last restructure (default) is the fundamental question. After all, to restructure (default) on a previous restructure (default) calls into question the ability of those who carried out the original restructuring.
In restructuring the restructuring (or defaulting on the default) that, despite Mr Barroso immediately taking no blame at the start of his video clip – a pointless and very unnecessary statement to make – would certainly have a lot to do with the EU institutions as they were very much front and centre of the restructuring of Greek debt and would need to be once more to restructure the original restructuring they obviously got quite wrong.
Without tackling that nasty issue, Greece and the Greeks are doomed to a decade or more or terrible downwards pressure on wages, employment, life-style and feel-good society psychology.
Chris…the eu is for the Elite…not the likes of us.
I know that David… But it does not have to be this way.. If we all get involved and get active, push for the right things, if us the people unite and form one voice, then changes will come… If we still remain divided and think only withing our national “box” then things will never change.. They want globalization and open markets? Well let’s give it to them….with our conditions!!!
I agree with that. globalization in all respects be it in tax paying and salaries.
Call Tim Guitener and Obama they are genuses
How an unemployed English graduate tries to survive, in making
fun video clips aboutthe €uro-Zone crisis. Congratulation!
Well, that video sums it up accurately. We love Greece, and all the others, that are in a similar mess. Now we must find a way to get them and us working in order to put us all back on top.
I found this on the letter’s page of our, Daily Mail, this morning. Which was an enormous surprise to me as they are so eurosceptic. It must have really got in their craw when they printed it for all to see.
It begins with:
Face it, Merkel is right.
The position of Norway and Switzerland (Letters) can in no way be compared with the UK’s position in the European Common Market.
The combined population of both countries is just a fraction of Britain’s. Norway is awash with natural gas, oil and hydroelectric power, while Switzerland has an established international banking and finance system and a small but immensely sophisticated engineering industry. Their combined GDP per head of population dwarfs the UK’s.
As far as Britain reaching out to the Commonwealth goes, the truth is that former colonies look towards their closer neighbours in Asia and the Americas for trading ties. Why look for markets thousands of miles away when we have a huge trading block on our doorstep?
The truth is unpalatable to many, but Angela Merkel is correct. The UK belongs within the EU, it’s going through a fraught time, but for our children’s sake and future generations, Europe should be the bedrock on which our economy should rest.
Newcastle upon Tyne.
DCZ Thompson sums up how the true majority of the UK feels about the EU, but the only word from our press and media is, we all want out. That is absolute nonsense. We are not as dumb as the BNP and the EDL would have you believe. We do have a considerable thinking populous there that has very little voice.
The Dutch are to busy with pleasing the muslims and growing their arses fat. They have no time for delicate Greek matters.
There are a hidding plan to change Europe against the countries of the south, infomeyouselves.
No the worst is still to come the day the rest of the EU members abandon Greece, like they will do to Portugal after they finished with Greece. But some of the richer states like Germany must remember that when they needed these countries helped them. Also the richer nations of the european union must remember that its partly their fault that Europe is in the state that it is because they paid or offered money to the poorer countries to destroi the little economy they had left instead of checking on them like they are doing now while the troika is helping to take the rest of these small economies money with the interest rates they practice.
It is obvious that Barosso has no idea of reality.
The EU must stand next to all of its member-states. It should provide help and co-oporation. The EU is a family, not a master and a slave.
call Tim Geithner and Obama they know what to do