Greece's economic consolidation: success in public finances meets stagnating real wages

Greece's consolidation course is bearing fruit - and yet it is taking its toll. The state budget is solid and some loans are being repaid early. But hundreds of thousands in the country cannot service their liabilities and the average wage has stagnated for a decade and a half.

While large euro countries such as Germany and France are struggling with growing deficits, the former problem child Greece is doing better again. The government in Athens expects solid growth and a further decline in public debt next year. According to the draft budget for 2027, the economy is expected to grow by around two percent - supported by investments, increasing exports, domestic demand and tourism, government circles said. National debt should fall to below 130 percent of gross domestic product (GDP), two government officials said. The debt ratio would have fallen by around 60 points since the peak of the corona pandemic in 2020.

Greece has repaid loans from the rescue packages early and is expected to have a lower debt ratio than Italy by the end of the year. For the current year, the government expects a primary surplus - which excludes debt service costs - of around four percent of GDP, almost doubling the original forecast.

For many Greeks, however, the situation has not yet noticeably improved. Around 1.5 million people cannot repay loans. The real purchasing power of households is among the lowest in the EU. The average monthly wage of 1,500 euros remains roughly at the level of 2009. In addition, the debt ratio in relation to GDP will still be the second highest in the EU at the end of this year.

Before the parliamentary elections scheduled for next spring, the government is now planning a package of measures worth 2.2 billion euros. It should include tax relief and wage increases for pensioners and employees. Just the day before, the government had announced discounts on fuel in light of the Iran war in order to cushion rising costs.