ECONOMY

EBEA wants bold steps to stem inflation and business downturn

The government needs to adopt a responsible policy of radical changes in order to boost private investment and the competitiveness of firms, says Drakoulis Fountoukakos, chairman of the Athens Chamber of Commerce and Industry (EBEA). He believes that the lack of competitiveness, which fuels inflation, is the main cause of the current business downturn. In this interview, he also expresses anxiety over the government’s recent decision that retailers will have to display prices with the full indications of «euros» and «cents.» You recently said that the change in how prices are displayed can lead to a new round of price rises. What makes you believe that? Two main reasons: One is the additional cost that the change involves. We will need thousands of man-hours to change thousands of notices, even the packaging and bar codes in many cases. This cost will be passed on to the consumer. The second reason is purely functional, as it concerns the easiness of transactions; if, for instance, a product costs 2.90 euros, it will be easier for retailers to signpost 3 euros. There is a more general concern at government level that price hikes by businesses are fueling inflation. Is this true and what can be done in practice? The government knows full well what to do. First and foremost, it must fight the causes of inflation; tidy up public finances; deal with the problem of debt and excessive public spending; boost competition and free markets of monopolies and oligopolies. Even though the figures say otherwise, there is widespread consensus that business has taken a downturn. What is your feeling? Of course there is a downturn; it is shown in the lack of liquidity and the lower profitability of firms. Small firms are driven out of the market and it is hard going for the bigger ones. The main cause of this crisis is the lack of competitiveness of the Greek economy. Inflation is eroding incomes; our company taxes are among the highest in the EU. Markets are insulated, foremost those of tertiary education, labor and energy. Unemployment is the number one problem and we are laggards in attracting new investment; corruption and red tape are also among the causes of the crisis in the market. Which sectors are hit hardest? Industrial production is stagnant, tourism was down last year, exports are declining. The growth of the Greek economy mainly depends on the large projects subsidized by EU funds; however, the State continues to strangle the private sector in most fields. What must a firm do today to boost its competitiveness? Firms will have to reduce their operating costs, improve product quality and labor productivity, expand to new markets, and invest in personnel training, new technologies, research and innovation. This is the only realistic way to survive in a globalized market. This effort must be assisted by the government through a responsible policy of radical changes and reforms that will sharpen competitiveness and pep up employment. EBEA recently became a member of the European Chambers Association. How important is this? EBEA can now offer better support to the business initiatives of its members and help them tap the opportunities of a single European market; it makes us equal members in the most important representative bodies of business in the EU. EBEA now represents the most vibrant segment of the Greek economy in a body trying to deal with the present and future challenges to the European business community, to promote measures and policies supporting the presence of European firms in the global market. What activities is EBEA currently promoting and which initiatives is it planning for the near future? It is among our priorities to give resolute support to our members’ demands, first and foremost for a drastic reduction in company taxes from the present 37.5 percent to 25 percent; to fight the burdens that red tape, corruption, and inefficient public administration place on business; and to remain outside party politics so as to maintain our credibility in representing our members.