Now even the eurozone admits it has condemned Greece to never-ending austerity…(And The World…)
By Jeremy Warner
TelegraphUK
March 13th, 2012
There’s a general view out there that with private creditors having agreed their 50pc haircut, the “Greek problem” has been solved, at least for now. Unfortunately, it has not.
According to Reuters, an unpublished “Compliance Report” by EU executives has concluded that Greece will have to impose a further fiscal squeeze in 2013/14 amounting to some 5.5pc of GDP in order to meet the targets that underpin the second international bailout. The chances of Greece being able to do this are about zero, though that is my conclusion, not that of the report.
According to the report, the austerity measures already adopted by Athens should be enough to bring the primary deficit down to the agreed 1.5pc this year. However, “current projections reveal large fiscal gaps in 2013-14”. The projected shortfall is reckoned to be about 5.5pc of GDP. All this, of course, assumes that Greece achieves the output levels forecast by the Troika, the chances of which are again about zero. So infact, the required squeeze will be even larger, further undermining growth and digging an even deeper hole.
Unabashed, the report states that “substantial additional expenditure cuts will have to be announced and adopted by Greece in the coming months, in particular when Greece updates its medium-term budget in May 2012”.
Where is Greece expected to find these cuts? Further savings in welfare payments, pharmaceutical spending, defense and restructuring of central and local administration are said to be under discussion. Has anyone told the Greek electorate, which is due to go the polls next month, about this? Apparently not.
The Rest…HERE
