The bailout for Greece aims to stem a crisis that has shaken the world’s financial markets to the core. So where will the latest measures fall?
A hike in taxes was always on the cards and VAT will rise by 2 points up to 23 percent. It follows a similar increase which took place in March. Drivers, drinkers and smokers will also feel the squeeze, with duty rocketing by a further ten percent.
No sympathy for those wishing to retire early, with a ban on retirement below the age of 60. The minimum contribution to qualify for a full pension will also increase to 40 years during the the next 5 years.
Public sector workers are also set to bare the brunt of the painful economic cuts. A pay freeze is to be extended to 2014. Christmas, Easter and summer holiday bonuses, also known as 13th and 14th salaries will also be cut. Civil servants allowances will also be chopped further.
Those measures aim to cut Greece’s debt by 30 billion euros over the over the next 4 years. The deficit forecast for this year is a little over 8 percent but by 2014 it is hoped that will drop to around 2.6 percent of GDP.
That should bring Athens in line with EU limits. The question now is whether the Greeks themselves will be prepared to swallow the large dose of fiscal medicine.