ECONOMY

Households see billions of euros of income wiped out

Households in Greece have seen their combined incomes shrink by 5.4 billion euros (or 13.6 percent) within a year due to soaring taxes and reductions in salaries and benefits, according to the Hellenic Statistical Authority (ELSTAT).

As a result, households have dramatically curtailed their spending and been forced to resort to dig into their savings, while investment in the country continued to decline over the last 12 months, shrinking by 20 percent year-on-year, second-quarter figures have shown.

The disposable income of Greek households amounted to 34.1 billion euros in the April-June period, down from 39.5 billion euros a year earlier. ELSTAT attributes this to the 37.3 percent increase in taxation on incomes and property starting from the second quarter of 2011, along with the 15.1 percent reduction in employees’ salaries and the 9.5 percent drop in social benefits.

Consumer spending contracted by 7.3 percent in Q2 compared to the same period in 2011, amounting to 37.1 billion euros, against 40 billion a year earlier.

The ELSTAT figures also showed that household savings shrank 8.5 percent, after dropping 1.2 percent in the same quarter a year earlier. Investments declined by 20.6 percent to 3 billion euros, against 3.8 billion in Q2 of 2011.

The net borrowing needs of the economy in general amounted to 2.4 billion euros, down from 6.1 billion a year before, thanks to the major reduction in the trade deficit.