A new year brings new disappointments in Greece. The debt struck country expected to see a year over year rise of 8.9% in budget revenue in January.
Instead, tax revenue dropped by 7%, 1 billion euros short of target. The ongoing suffering in Greece could lead to an anti-austerity left wing government.
Greek tax collection is not the best in the world, to say the least. But the blame also falls on the austerity measures imposed by the troika – less government spending leads to less consumption, that leads to less tax, that leads to new austerity.
A vicious cycle.
The Greek budget for 2012 ran for less than 6 weeks, but will probably need to be revised soon. The Greek depression is felt in higher unemployment rates and in closure of businesses. Where are the reforms that would encourage entrepreneurship? Reports show that the opposite is happening:
At the same time the crisis is seriously hurting the competitiveness of Greece’s economy, resulting in a considerable drop in entrepreneurship. Finance Ministry data showed that some 111,000 companies shut down in 2011, against just 75,000 new businesses being set up. In fact the majority of new start-ups are not actual enterprises but newly self-employed professionals.
Politicians might be getting closer to an agreement on new austerity, and this is cheered by the markets. These same politicians might be replaced soon.
The New Democracy party, which is the main center-right party, is still leading the polls with 31% to replace the former PASOK government (center left). But politicians that haven’t been involved by austerity are gaining strength.
A new poll shows that 3 left wing parties that have been in opposition are behind New Democracy but ahead of PASOK which is devastated with 8%. The three parties, Democratic Left, KKE (communists), SYRIZA (radical left) have 42.5% support altogether.
If their popularity grows, they could block a center-right government.
On the right, the participation of the LAOS party in the Papademos coalition weakens it, and helps an ultra right party named Chrysi Avgi (Golden Dawn) to get close to entering the parliament.
Austerity isn’t popular in Greece, to say the least. The technocrat Prime Minister, Papademos, entered office with huge support, but now 91% of Greeks are disappointed with his performance.Get the 5 most predictable currency pairs