Do you recall the ‘G’ in the PIIGS countries abbreviation of Portugal, Ireland, Italy, Greece and Spain? Well Greece is finding its way back into the news with bad economic data.
GDP for the second quarter of this year has dropped by 3.5% and there has also been a record rise in unemployment. This has raised the fears of another wave of social unrest in the country following the violence and deaths earlier in the year when their crisis broke.
Greek politicians have been battling with mountainous debt and the harsh austerity conditions imposed on them for accepting a multi-billion euro rescue package.
Not only has there been the drop in public spending expected as part of the rescue package but there has also been a flight of investment money. So for a country that had about 22% of workers in public service this will be a hard transition.
This whole saga has hit the Greek people hard. The retirement age has gone up, VAT has risen, pay has been frozen and employers have more law on their side when cutting workforce numbers. Unemployment for young Greeks between 15 and 24 is now a huge 32.5%.
This will back up the more gloomy predictions made by some who contended that Greece should not have been bailed out but rather should have been left to fail and withdraw from the Euro.
Having already poured so much in will the euro-zone be forced to restructure the whole deal again?
Now the calls will be out for the UK coalition government to stop its programme of cuts. “Look what an austerity drive has done for Greece!” they will shout. “Print more money and spend it on consumables, save Britain!”
But the Greek example shows you what happens when your head is stuck firmly in the sand for far too long. The UK has hopefully managed to stop the overspending in the nick of time.
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