Econintersect: Thursday evening everyone thought that the Greek government had reached an austerity budget agreement that met the requirements laid out for them by the European Commission. However, overnight the Eurozone finance ministers dismissed the plan and told Greek finance minister Evangelos Venizelos to go back to the drawing board in Athens. Because the previously implemented budget cuts in Athens have throttled the Greek economy the country’s GDP has contracted more than had been previously been anticipated.
The instructions to Greece from Brussels early Friday were to cut another €325 million from the proposed Greek budget to offset the decline in GDP that has occurred from previous austerity moves. Of course, another cut will further reduce GDP and then another cut will be required and then . . . You get the idea. The caption photo shows the resulting effect. (Click on photo for larger image of the whirlpool.)
According to Yahoo News (Associated Press) the Greek government agreed Thursday to drastic cuts to bring their deficit under control, including a 22% cut in the monthly minimum wage to €586 ($780), layoffs for 15,000 of civil servants and an end to dozens of job guarantees. Further cuts down the road include a 20% decrease in the government workforce by 2015.
Greek deputy labor minister Yannis Koutsoukos resigned Thursday saying that the packaje now rejected by the EU had gone too far, “was too painful for working people.
Cuts already made have driven Greece’s unemployment rate above 20%, the highest in history.
Greek trade unions said they would start the second 48-hour strike of the week today (Friday). The picture below shows the past, present and future of Greece.
- Eurozone dismisses Greek budget deal (Joshua Chaffin, Alex Barker, Ralph Atkins and Kerin Hope, Financial Times, 10 February 2012)
- Understanding Greece’s Austerity Deal (Associated Press, Yahoo News, 9 February 2012)
News articles were found on Econintersect Europe newspaper page.