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EU Commission Calls for More Measures

Despite expectations to the contrary, the European Commission asks for additional Greek measures in its report published on Thursday on the European Union’s economy as daily Kathimerini writes. Brussels expects Greece’s budget deficit this year to amount to 8.9% of the country’s gross domestic product, suggesting that ”it is no longer sustainable for the fiscal gap to close within 2011.” The original draft for the 2012 budget included a forecast of 8.5% for this year’s deficit, while the target had been 7.6%.
For 2012, the Commission expects the deficit to go down to 7%, against an original estimate of 6.8%. Brussels sees a minimal drop to 6.8% in 2013. The report goes on to underscore the significance of the October 27 eurozone summit agreement, arguing that if it is not implemented, the public debt will next year soar from the forecast level of 162.8% of GDP to 198.3%. Greece’s economy is not expected to revert to growth before 2013, while the decline in labor costs is seen continuing in the coming years. The Commission estimates that the recession will reach 5.5% of GDP this year and 2.8% in 2012. In 2013 the economy is projected to post 0.7% growth. ”Greece’s efforts for a fiscal adjustment are great,” the report notes, ”but more measures are necessary,” without which, it argues, the deficit would spiral out of control. The issue of the measures for 2013 and 2014 remains open between Athens and its creditors. They must amount to 8.2 billion euros and concern nothing other than the reduction of public expenditure and in a structural rather than across-the-board fashion. Finance Minister Evangelos Venizelos had a meeting on Thursday with ministry officials ahead of the tabling of the 2012 budget that must reach Parliament by November 21.

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