Greek economy: once more reeling – and faced with unpleasant decisions

by Antonis D. Papagiannidis

For a time, there was some sort of enthusiasm in Athens with incoming news/expectations that the Versailles March 10-11 European Summit would result in a new era of debt mutualisation on part of EU “27”. This would come handy to pay for the support of businesses and households under the shock of energy prices rises caused by the Ukraine crisis and the overall inflation wave. It was also expected that the Brussels system would put in place a mechanism of natural gas and electricity market controls assorted with price caps – Greek PM Kyriakos Mitsotakis had addressed to the European Commission President Ursula von der Leyen a six-step Plan proposed to that effect.

The Versailles European Council Declaration did little towards this direction – just as it did no more than pay lip service to the “fast-track” accession application on part of beleaguered Ukraine (which “belongs to our European family”) further than taking act of Kiev’s move – and asking the Commission to work on submitting its opinion, along with the one on the applications of Georgia and Moldova. The ponderous Brussels mechanism in all of its majesty.

The interest in Athens over EU summiteering was mainly caused by the fact that the Government, faced with the growing unpleasantness of having to put in place some sort of safety net for those reeling under the inflationary shock, hoped for some measure of “Brussels” support. This didn’t materialize yet – so measures have to be adopted at a national level and the responsibility going with such decisions has to be assumed. That is, spending choices have to be made in an economy that was just picking up after a decade of EU-mandated austerity followed by the corona pandemic but is now faced with ebbing growth forecasts to a 3% area; (with the yields of the country’s sovereign debt already over 2.5%); plus a  6+% of headline inflation; plus doubling of its external deficit in January along with a dip in industrial production.

So, it is fully understandable for the authorities to pray for a EU parachute ready to open – just as it did when the Recovery and Resilience Fund was put in place (inspirationally christened “Next Generation EU”) to face the corona pandemic after-effects. For the time being,, one has to make do with the fact that the Versailles event was informal – so, over to the full-dress European Council of March 24-25!