NEWS

EU to blast Greece for economic failings

In a report to be published today, the European Commission will launch a scathing attack on Greece for not taking advantage of the positive domestic economic climate brought about by the Olympics to bolster its economy, sources told Kathimerini yesterday. The report on the implementation of Broad Economic Policy Guidelines stresses that despite having hosted the 2004 Games, Greece is still suffering from the same chronic economic failures of its past. A key area in which Greece comes in for heavy criticism is the poor state of its public finances, which, the report argues, displays a lack of decisiveness on the part of the government in implementing measures to control state expenditure. The Commission reiterates the criticism that effective measures were not taken to combat a burgeoning deficit and debt problem last year. The report also says that the government did little to use public funds effectively to spur on labor productivity and create opportunities for the unemployed. The report points out that Greece’s labor productivity rate is one of the lowest in the EU and actually dropped during 2003 and 2004. The report adds that one of the key factors for the lack of progress is the dearth of entrepreneurial dynamism in Greece, which it attributes mainly to endless red tape and a complicated tax system. The Commission acknowledged, however, the current government’s efforts to simplify the labyrinthine tax regime and to reduce corporate taxes. Greece also needs substantial reforms to its pension and social security system – a process that began in 2002 but needs to be galvanized, according to the report.