Wednesday

17th Jul 2019

Greece accused of 'bending' euro rules

Greece has exceeded the maximum permitted level for budget deficits since 2000 but underestimated its figures, according to a report in the Süddeutsche Zeitung.

Relying on diplomatic sources, the paper states that the deficit between 2000 and 2002 was on average two percent higher than stated, due to the Greek authorities using a different way of calculating military and social expenditure.

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If confirmed, Greece would have broken the rules underpinning the euro every year since entering the single currency.

And the country is already under investigation for its 2003 deficit, which was revised up from 1.7 percent to 4.6 percent.

Greece also has one of the highest debt levels in the 12 country euro area.

"Such trickery has a devastating effect on the whole euro zone", German Christian Democrat MEP Alexsander Radwan told the paper.

Instability Pact?

Officials have been concerned for some time about the veracity of Greek deficit figures.

At a recent informal meeting of finance ministers in the Hague, the Dutch Presidency expressed disquiet at the discrepancy between the figures originally quoted and the revised number.

The fiscal rules holding the euro together - known in Brussels jargon as the Stability and Growth Pact - were originally conceived by Germany as a way to keep the high deficits of Southern European countries, such as Greece, under control.

Within a single currency unit, it was argued, high deficits in one country would have a negative impact on the others mainly in the form of pushing up interest rates for the whole area.

But ironically, it is Germany which has given Brussels the biggest headache, breaking the rules on numerous occasions and forcing through changes in the rules which are currently under technical analysis in Brussels.

Glossary of key euro pact terms

The language surrounding the EU's Stability and Growth Pact can be highly complex for the uninitiated. Click here for an explanation of the key terms.

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