Tuesday 21 October 2014

Greek unemployment above 25pc, biggest company pulls out

Harry Papachristou and Matt Robinson

Published 11/10/2012 | 11:43

GREECE’S jobless rate topped 25pc and its biggest company said it would quit the country today in a fresh blow to an economy that German experts warned cannot be "saved" without writing off more debt.

The announcement by drinks bottler Coca Cola Hellenic (CCH) that it was switching its primary listing from Athens to London, and moving its corporate base to stable, low-tax Switzerland, is a bitter blow to the debt-crippled nation.

The firm, which bottles Coke and other drinks in 28 countries from Russia to Nigeria, is Greece's biggest by market value and is 23pc owned by The Coca-Cola Co of the United States. It said its Greek plants would be unaffected.

CCH's announcement coincided with data that showed Greek unemployment climbing for a 35th consecutive month in July to 25.1pc from a revised 24.8pc in June. The jobless rate has more than tripled since the country's now five-year-old recession began.

Fifty-four percent of Greeks aged 15-24 years are out of work, fuelling violent protests against the tax hikes, spending cuts and public sector job losses demanded by the European Union and International Monetary Fund in exchange for more than €200bn in loans since 2010.

Greece is still far off target.

IMF chief Christine Lagarde, speaking in Tokyo, backed calls to give the country two more years, up to 2016, to cut its debt mountain to 120pc of GDP from 165pc in 2011.

The IMF is also pressing official lenders such as euro zone paymaster Germany to take a "haircut" on their Greek debt similar to that swallowed by private bondholders this year.

With elections in 2013, Berlin is resisting, but Germany's leading economic institutes warned on Thursday that without further debt restructuring, the Greek economy would not make it.

"Yes, we don't think Greece can be saved," Joachim Scheide, head of forecasting at the Kiel-based IfW institute, said when asked whether investors in Greek debt would have to accept another haircut.

"We need a restructuring of Greek debt; that would help Greece best," he said.

German Chancellor Angela Merkel, who was greeted with angry protests on Tuesday on her first visit to Greece since the debt crisis erupted, opposes any further restructuring, at least until after Germans vote next September.

Her visit came as the Greek government is locked in talks with its "troika" of international lenders on more austerity measures to secure a next tranche of loans worth €31.5bn. Without further aid, Athens says it will run out of money by the end of next month.

Data released by the finance ministry showed Greece had narrowed its central government budget deficit by 37pc in the first nine months of the year.

But the figures did not include spending on local municipalities and social security - the areas of most concern for the troika, which comprises the IMF, the European Union's executive Commission and the European Central Bank.

Even after steep tax hikes, net government revenue stagnated at €36.7bn, or €1.3bn short of an interim target set under the bailout plan.

Private businesses say the tax hikes are suffocating them. Coca Cola Hellenic had complained about the high tax measures, and on Thursday said it was relocating.

Its Greek operations, which account for five percent of its bottling business, will be unaffected, but the move was bad news for a nation struggling to compete inside the euro zone.

Chief executive Dimitris Lois said the decision to switch the company's primary listing to London and its corporate base to Switzerland made "clear business sense".

Its move follows Greek dairy group FAGE's relocation to Luxembourg this month.

"This is a healthy company that does not want to suffer from Greece's high country risk," said an analyst, who spoke on condition of anonymity.

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