Sticking point in Greece bailout negotiations


I understand the sticking point in negotiations between the Greek government and the Troika is the latter's demand "that by the end of the year the deficit will be 7.5 % and that all fiscal measures will give us this outcome".

The current projection is 8.5% of GDP. Many economists believe this is unachievable, given the projected shrinkage of the Greek economy, the deteriorating tax take and the newly revised growth projections of the International Monetary Fund (IMF) for the global economy.

I've seen the reason why today.

I was told by anti-tax campaigners to turn up at a magistrates court. As I got there they invaded the building and blockaded two courtrooms, effectively preventing the auction of repossessed homes, chanting the slogan: "no homes in bankers' hands".

It was small scale, good natured and - as they say - granular.

The news dribbling out of the deal details 30,000 workers to be put into a "labour reserve" on 60% pay, pensions over 1,200 euros a month cut by 20% etc. These are the bits the government can actually achieve.

But it is tax raising that seems to be at a dead end, and if the IMF/EU stick to this position - which was briefed to me by a government member - it is quite hard to see it being achieved.

Paul Mason Article written by Paul Mason Paul Mason Former economics editor, Newsnight

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After 12 years on Newsnight, Economics editor Paul Mason has moved on to pastures new and this blog is now closed.

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  • rate this

    Comment number 21.

    Do any of you know if this comment is correct:

    There are three important parts ( i dont know what they are ) to the UK economy that each has to be covered by a 1% growth. Therefore the UK economy has to grow a minimum of 3% per annum otherwise its technically a recession?

  • rate this

    Comment number 20.


    In a very small way wee Harold Wilson was ahead of his time.
    His Selective Employment Tax was the last gasp of manufacturing before all was swept away by decades of Thatcherism espousing the free market.

    SET was seen off by USDAW who wanted warehouse workers to be on the same footing as industry.

    Now we have import terminals and no industry. Except banks....

  • rate this

    Comment number 19.

    Hi Paul

    With the way that the Greek economy has performed this year it is more realistic to say that pre the new austerity package Greece is on a path for a fiscal deficit of 9.5% of GDP rather than the 8.5% you quote. Was it a misprint?

    How exactly is Greece going to reduce this deficit now she is in an economic depression?

  • rate this

    Comment number 18.

    The Greeks are being scapegoated; they're nothing but lazy over-spenders, dependant on socialized Government.
    I think this level of austerity is wrong - maybe even amoral.
    What is needed is an FTT, if not global, than at least across all EU countries. Those banks that chose to leave - good riddance - because essentially what you have left is retail banking vs investment speculation.

  • rate this

    Comment number 17.

    Look on the bright side.
    I reckon that there is about as much chance of Greece avoiding a default as being hit on the head by a bit of falling space debris from the UARS satellite.

    So don't forget to put your helmets on tomorrow.


Comments 5 of 21



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