Greece crisis: Five things we’ve learned this week as bailout deal looks closer
With the €53.5bn bailout talks set to start in Brussels, here are five things we've learned this week:
1. Referendum/u-turn: The Tsipras-led Greek government seems to have forgotten the results of the referendum last Sunday where the people voted down the earlier terms of a bailout deal. Instead, Prime Minister Alex Tsipras has presented a plan for €12bn in austerity measures – the earlier terms involved €8bn so that’s a €4bn u-turn. That includes more taxes and tighter pension reforms in return for the bailout.
2. Debt reprofiling: The Germans are now saying the Greece can’t pay back its multi-billion debt pile. However, they are stopping short of a debt write-off although better terms on interest rates and the time frame on repayment are looking more likely – debt reprofiling, as they are now calling it.
3. Bundestag: Even if European leaders agree the terms of a deal at the weekend, it will also have to be passed by German’s Bundestag. Chancellor Angela Merkel is already under intense pressure from her party colleagues on the issue and they are not happy about any concessions to Greece in return for a bailout deal. In addition, the Dutch, Finnish, Austrian, Slovak and Estonian governments will also have to vote.
4. Pensions: Greece has agreed to phase out its supplementary pensions a year earlier, in 2019. Interestingly there is no mention of them being replaced and, in addition, the top 20pc beneficiaries will also take the hit. The basic pension age will increase to 67.
5. VAT: Controversially, the VAT exemption for Greek islands will be removed and the 30pc discounted rate will also go , The proposals will hit richest and most popular islands firm.