Greek store closures spike as recession, austerity return

Greek store closures spike as recession, austerity return

Running a business in Koukaki is becoming a struggle.

Shop-owners in the central Athens neighborhood, one of the capital city's most financially diverse, are finding it a lot more difficult to get by.

They could be cutting hair or selling extra-large shirts – it makes no difference.

Their tales of hardship can be repeated up and down the country of nearly 11 million people.

Empty storefronts are again a feature of Greeces towns and cities amid a crisis that put Greece's future in the euro in doubt.

The downturn worsened after the late-June decision by the Greek government to impose a series of strict controls on the free flow of money, with a paltry 60-euro a day limit on daily withdrawals from ATMs. Though banks reopened this week for the first time in more than three weeks, the ATM withdrawal limit is unchanged and cash is becoming scarce.

For an economy where cash payments are the norm, that's a problem.

In Koukaki, about 2 kilometers (1.2 miles) south of downtown Athens, 65-year-old mechanic Giorgos Prasinoudis is angry.

His wife and 11-year-old daughter have already moved to Germany – the country that's ironically blamed for many of the economic and social problems afflicting Greece.

On Wednesday, he sat drinking coffee on the sidewalk outside his motorcycle repair shop, with posters of bikes and children's drawings pinned to the wall. Hes closed the store after 32 years. A "For Sale" sign is taped to the window.

"It's over for Greece. We won't recover for another 50 years," he said. "The country borrowed so much money, those who benefited left the country, and ordinary people have been handed the bill … I hope my daughter learns German and doesn't come back. Not even for a holiday."

Prasinoudis is one of the countless victims of Greeces economic crisis. Locked out of international bond markets in the spring of 2010, the country has relied on foreign rescue money to pay its debts – on condition that tough austerity measures, such as cuts to spending and increases in taxes were imposed.

The cost has been huge.

A million jobs, mostly in the private sector, have been lost since then ? around a fifth of the country's workforce.

But after appearing to stabilize last year, the Greek economy has gone into reverse but unemployment remains high. At last count, unemployment was still over 25 percent and more than 50 percent for the under-25s.

Alongside the capital controls, the government imposed a new round of austerity, raising sales taxes and levies on businesses, while maintaining emergency taxes on households that have eaten up disposable incomes.

Early Thursday, parliament approved a second round of measures demanded by rescue creditors for a new bailout.

Retail associations fear a return to the peak levels of unemployment around 2012 when they were hit by a surge of business failures.

The main commercial street in Koukaki is beginning to look a lot it did back then: Vanishing behind whitewashed front windows are a bakery, grocer, barber, and clothes shops.

Two blocks away from the repair shop, hardware store owner Costas Kitsos says sales have plummeted since capital controls were imposed on June 29.

'People come into the shop but they ask about the prices and don't buy anything," he said. "Everyone is scared to spend money because they don't know what will happen."

Five years after the first bailout by Greeces partners in the euro currency and the International Monetary Fund, some 85,000 retailers have gone out of business and the sector has lost 45 percent of its income, according to the National Confederation of Greece Commerce.

Constantine Michalos, head of the Athens Chamber of Commerce, wrote a letter to the finance ministry this week urging the government to take urgent measures to help businesses stay open, particularly those struggling to import goods from abroad.

"In essence the bank holiday has not ended," he wrote. "The vast majority of Greek companies are half a step from going out of business."


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