Tuesday 12 December 2017

€5.7bn in public spending cuts as Greeks approve 'tough' budget

Greek PM Alexis Tsipras
Greek PM Alexis Tsipras

Madhumita Murgia

The Greek parliament has approved a "tough" 2016 budget, which will include large spending cuts and tax increases.

Despite this, it assumes the 2016 recession to be less severe than forecast.

The budget was pushed through by 153 votes for, compared to 145 against, with the opposition calling it "anti-growth" and "socially unfair".

The Syriza party of Prime Minister Alexis Tsipras is under pressure to apply the terms of July's much- opposed EU bailout, which is worth up to €86bn.

The terms include the privatisation of €50bn of Greek assets to help pay back its debts, slashing pensions and the handing over of a veto power on domestic laws to Brussels.

The 2016 budget, the first by the Tsipras-led government, includes €5.7bn of public spending cuts, with €1.8bn coming from pensions and €500m from defence.

It also includes tax increases of just over €2bn.

The GDP for 2015 remains unchanged, which is better than October's forecast of a 2.3pc contraction.

Forecasts for 2016 are also optimistic: the budget projects only a 0.7 pc reduction, compared to a predicted 1.3pc in the draft budget.

Mr Tsipras described the budget as a "difficult exercise" and an "agonising effort," while emphasising that for the first time in five years, spending on hospitals, social welfare and job creation was being increased modestly within the bailout's constraints.

Mr Tsipras's government has already lost the support of two of its ministers during the drawing up of the budget, when it discussed the facilitation of foreclosures against people who cannot pay their mortgages.

Despite austerity measures, debt is forecast to grow to €327.6bn, or 187.8pc of GDP, from 180.2pc in 2015.

According to Reuters, EU creditors will return to Athens today for further discussions about the issues of pension and tax reforms. (© Daily Telegraph)

Irish Independent

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