Up the creek with a paddle
It was another bad week for Greece’s economy as the country saw its borrowing costs shoot up on the back of unsubstantiated reports that the government wants to renegotiate its EU-IMF rescue deal and following indications that the final figure for last year’s public deficit would rise from 12.7 percent of gross domestic product to above 13 percent. The decision of Greek banks – which can only borrow from the European Central Bank at the moment as nobody else will lend to them – to draw more funds from a bailout package the previous government set up also added to the instability. As the spread between the yield of Greek and German bonds reached a record high, a sense of gloom descended over this corner of Europe. A few days earlier, it seemed that we were heading for recovery. Now, recovery looks like an island on the distant horizon and all we have at our disposal to reach it is a rickety raft and a paddle. This collective struggle is also being played out on an individual level. As we become transfixed by bond spreads, deficit percentages and the «Will we? Won’t we?» dance with the International Monetary Fund, it’s easy to forget that our country’s plight is also having an impact on the real economy, on people. Few Greeks are financially secure enough to be impervious to the effects of the new taxes and cuts in public spending. Those of us not in the public sector, where the reduction in wages is obvious straight away, are beginning to feel the impact on our daily budget. Gas, for instance, has shot up in price, the rise in value-added tax has made the supermarket run a little bit more expensive, while the lack of liquidity in the market means it’s more difficult to get hold of a loan or credit card. This means that, consciously or not, we are all cutting back on our spending – maybe not drastically but in discernable amounts: We will make do with what is in the cupboard for dinner rather than ordering out, we will try to squeeze a bit more life out of an old pair of shoes or we will wait a quarter of an hour longer at the bus stop rather than jumping in the first taxi that passes. It was a real sign of the times that taxi drivers, usually the first in line when it comes to squeezing an extra cent out of their customers, decided this year not to demand a 1-euro Easter bonus for each journey. Not only that, they asked the government not to bring in the third wave of price rises they had agreed with the previous administration because they realized their services are becoming too expensive. Store owners have also suffered. Sales are estimated to be down by 15 to 20 percent so far this year and things could get worse. But like taxi drivers, shopkeepers will also have to think about how they do business. While the going was good, many made a killing – Greeks often paid among the highest prices in the eurozone for certain goods. Now, stores will have to adapt and find ways to attract customers who are much more wary about how much they’re spending. Unfortunately, some will not have the resources or the wherewithal to do this and will go out of business. In fact, some already have. This is the new reality in which Greeks find themselves. We will all have to keep paddling to stay afloat until recovery is within touching distance. The government, meanwhile, has the Herculean task of trying to stimulate growth at a time when money is drying up. It is pinning some of its hopes on so-called «green development.» There are signs that it could create jobs and wealth but this is likely to take time, which is something that Greece does not have on its side – our little raft may not last too much longer.
