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Greece: new leader, same problems

Greece: new leader, same problems
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Greece may have a new coalition government, but the problems and the anger are still the same, with yet more anti-austerity rallies planned this week.

The country’s incoming rulers face a mountain of debt: it stands at 162 percent of gross domestic product; the European Commission recently estimated the shortfall between income and spending at 7.8 percent of GDP, but on Monday the new Greek prime minister said it would be nine percent by the end of the year; unemployment in August hit 18.4 percent.

With government workers being laid off in droves and companies folding the economy is in freefall.

The European Commission has predicted it will shrink by 2.8 percent next year.

The new government’s first task is to come up with a plan to convince Greece’s rescue lenders that it has done enough to justify a second 130 billion euro bailout deal agreed by euro zone leaders last month.

That includes convincing inspectors from the EU and IMF that they do have viable plans in place to cut back numbers of government employees, wages and pensions.

If the inspectors are convinced then Athens will get the next instalment from the first bailout package — eight billion euros — which is needed by mid-December to pay wages, pensions and other bills and avert bankruptcy.

The idea of the unity government was that it would calm the political turmoil, but that is by no means guaranteed as the wrangling between the Socialists and New Democracy party continues.

The trade unions are also hostile to the new economic adjustment programme announced by Lucas Papademos and they plan more strikes against what they call a “death spiral” of economic contraction due to slashed salaries, tax hikes and lay offs.