Price of Greece bailout is five more years of austerity…(Map For The World?)…)

Wednesday, February 22, 2012
By Paul Martin

Greeks will suffer for five years as part of resolving eurozone crisis

Scale of cuts required to implement rescue package prompted analysts to raise spectre of another debt crisis later this year

David Gow in Brussels
Guardian.co.uk
Tuesday 21 February 2012

Greeks will suffer austerity measures for another five years as the price of their government securing a €130bn (£109bn) bailout to prevent national bankruptcy and chaos within the eurozone, it has emerged.

The scale of the wage and spending cuts required to implement the rescue package prompted an array of analysts to raise the spectre of yet another Greek debt crisis later this year and the country’s exit from the euro as recession deepens.

But Olli Rehn, the EU economic and monetary affairs commissioner, said Greece had lived beyond its means for a decade and savage cuts in labour costs were vital to restore competitiveness and growth.

The Greek prime minister, Lucas Papademos, and finance minister Evangelos Venizelos talked up the agreement, reached after 14 hours of talks at 5am on Tuesday, as “avoiding a nightmare scenario.”

José Manuel Barroso, the European commission president, said the deal “closes the door on an uncontrolled default, with all its economic and social implications that would mean chaos for Greece and the Greek people.” The deal helped push the Dow Jones index in New York over 13,000 for the first time in almost four years.

Senior EU officials admitted, that, after enduring wage cuts of 30% since 2009, Greeks would suffer a further 15% reduction in the next three years and even more cuts would be required after that.

The country’s economy, which contracted by 7% last year, is forecast to decline by a further 4.5% this year, stagnate in 2013 and then grow by 2% in 2014. But officials conceded that the Greek rescue programme is “accident-prone” and their forecasts are high-risk. Greece has been in recession for five years, losing 17% of its GDP.

Unemployment, now running at around 20%, is expected to remain above 18% this year and next, be just below 17% in 2014 and still be above 15% in 2015.

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