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

End of an era

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
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    Comment number 1.

    "It is quite hard to see it being achieved"...And the prize for understatement of the day goes toooooo.....

  • rate this
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    Comment number 2.

    The view from here in Germany is "let them pay for their sins".
    Trivial example: German schools make text books last for at least 10 years, so why do the Greek schools issue new books every year ?
    Make no mistake, the German government will fall if they attempt to force the German populace to pay the full cost of the profligacy of the Greeks.

  • rate this
    +2

    Comment number 3.

    Unpalatable, however I suspect the only way forward is for there to be a United States Of Europe.
    Easy to say but I suspect impossible to create.

    USoE would sort Greece but there are much bigger fish to fry.

    Greece is merely a side show. How soon before another Bretton Woods - at a venue to be decided - and a new world currency ~ or at least a new reserve currency?

  • rate this
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    Comment number 4.

    Surely the danger or tactic ( whichever way you look at it depending on what side of the table you sit on) is to settle an unachievable target..Greeks beware

  • rate this
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    Comment number 5.

    #2

    Germany would not be anywhere near as competitive in the global market if it were not tied to the euro and benefits from a reasonably favourable exchange rate for exports as a result.

    The economically naughty south made German goods afordable to the world and made the german economy rich enough to support that status quo.

    It may be a case of Germany.. be careful what you wish for.

 

Comments 5 of 21

 

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