ECONOMY

Businesses packing their bags

More than 1,500 companies have packed their bags and left Greece since the end of last year, seeking more favorable businesses environments and stable government economic policy, according to the National Confederation of Hellenic Commerce (ESEE). The group said yesterday that numerous manufacturers and service providers have set up shop in neighboring countries, taking with them jobs and capital that are unlikely to return. «The relocation of Greek businesses will create uncontrollable bleeding in the market, since businesses not only take income from the economy but are also unlikely to bring profits back home due to the 5 percent tax applicable,» ESEE said in a statement. Companies are also fleeing Greece in order to seek easier access to bank loans, operate under the weight of less bureaucracy and do business in a friendlier environment, ESEE added. A report prepared by the World Bank last week showed that Greece dropped 12 places to 109th position in its «Doing Business 2011» report, which compares business regulation in 183 countries. With the Greek economy expected to shrink at an annual pace of 4 percent in 2010, consumption, which accounts for about two-thirds of the economy, fell by just over 5 percent in the second quarter of the year. Austerity measures aimed at lowering Greece’s massive budget deficit, such as repeated tax hikes on consumer goods and government spending cuts, have weighed on consumers’ spending power, further hurt by rising inflation. Greece’s consumer price index in October rose by an annual pace of 5.2 percent, versus 5.6 percent in September, due to higher taxes on petrol, alcohol and cigarettes, the Hellenic Statistical Authority (ELSTAT) said yesterday. Consumer price growth will average 4.6 percent this year and 2.2 percent in 2011, according to the Finance Ministry. The country’s economic woes have led to the shutting down of two in 10 businesses, according to ESEE, which added that seven out of 10 are suffering serious liquidity problems. The group called on the government to create a more stable economic and political environment and introduce incentives to keep businesses from moving abroad.