Wednesday

20th Jun 2018

Rehn urges Greece to make further cuts

  • Mr Rehn said Greece was at a "critical" moment (Photo: ec.europa.eu)

Following a whistlestop visit to Athens on Monday (1 March), EU economy commissioner Olli Rehn urged the Greek government to implement further austerity measures in order to tackle its ongoing debt problem.

"It is of paramount importance for the Greek people to get their public finances back on a sustainable path," said Mr Rehn after meeting a string of ministers from the country's centre-left Pasok government.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

With a total debt pile estimated at €300 billion, and a budget deficit that reached 12.7 percent of GDP in 2009, Athens has already unveiled a package of spending cuts and tax rises this year, sparking a rolling series of protests and a one-day general strike.

But an EU monitoring team to Greece last week concluded the list of current measures would only reduce the country's deficit by two percent of GDP, partly because the country is suffering its first recession in 16 years, and not the four percent promised to Brussels.

In urging the government to implement "additional measures", Mr Rehn said the present juncture was a a "critical moment" for the future of Greece.

"No member of the eurozone area can live permanently beyond its means ... Either you keep your debt under control or your debt starts controlling you," he said.

Spending cuts, tax rises

In response, Athens looks set to announce additional measures this week, with analysts predicting a further petrol tax rise, a possible VAT increase, and further cuts to the public sector.

After winning a landslide election last October, Greek Prime Minister George Papandreou's party remains high in opinion polls despite the austerity measures.

"Today, we ask Greek men and women to enlist in our common cause to save our country and the overwhelming majority of our citizens are willing to do it despite the price and despite the burden ... Everybody says yes," Mr Papandreou said on national television on Monday night, in apparent preparation for fresh measures.

In January the Greek government announced public-sector spending cuts and tax hikes as part of a three-year EU stability and growth programme, followed by additional measures including a wage and hiring freeze and levy on fuel the following month.

A budget revision by the newly elected government last October revealed the true state of Greece's public finances, causing widespread unease in financial markets and a subsequent flight from government bonds.

With €20 billion of debt set to mature this April and May, the Greek government is frantically looking for additional funding, and may launch a fresh bond issuance this week.

During his press conference in Athens, Mr Rehn refused to be drawn on reports that Berlin and other EU capitals are preparing to provide Athens with financial aid, saying the "ways and means" to ensure the financial stability of the euro area was safeguarded.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Analysis

Beyond US dispute, EU still aiming at China

On the day it outlined its reaction to US tariffs on steel and aluminium, the EU commission also launched a case against China on property rights - an issue on which EU and US are working hand-in-hand.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Opinion

Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  3. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Join EUobserver

Support quality EU news

Join us