BofA notes eurozone’s leniency to this gov’t


The European institutions have shown a willingness to put up with the current Greek government but they are likely to raise obstacles for the next government after this year’s general election, according to Bank of America Merrill Lynch.

In a market report Kathimerini has seen, the bank notes that the recent 11 percent increase in the minimum wage constitutes “a concern given remaining uncompetitiveness and high unemployment” and “a risk for the medium term.”

It notes however that there is “a general understanding from the European Commission and Eurogroup that some concessions are needed to ensure political stability.”

The report goes on to acknowledge that “in an environment of rising populism and increased focus on purchasing power, this increase in the minimum wage appears to be tolerated by the official institutions.”

BofA reports that, according to polls, New Democracy “is well ahead to win all three elections” this year, but its program “calls for changing the fiscal policy mix to lower the heavy tax burden” – which in the BofA’s view would be welcome – although “we do not expect the official creditors to be open to any substantial changes in the fiscal targets in the years ahead.”