Two days after the government reshuffle, Prime Minister Kyriakos Mitsotakis is visiting the Ministry of National Economy and Finance.
Amidst increased uncertainty, due to economic and geopolitical developments, the economy is once again in the spotlight. Any escalation of differences in trade tariffs and the need to strengthen defense spending at the European level may affect the economies of the EU countries.
In Greece, the figures for the economy remain positive as the country continues its growth path, public debt as a percentage of GDP is decreasing, the budget is overperforming, high primary surpluses are being recorded and unemployment is falling. However, these must somehow be passed on to each citizen.
The change of leadership of the Ministry of National Economy and Finance with the placement of Kyriakos Pierrakakis at the helm does not alter the main objectives of the government’s economic policy. As the new minister emphasized during the handover ceremony, the challenge is to maintain fiscal stability, taking into account the needs of citizens and respecting commitments for surpluses, debt reduction and spending. According to Pierrakakis, the extroversion of the Greek economy, the attraction of productive investments and the development of all modern digital tools are national priorities.
Objectives and priorities
The focus of the economic strategy in the coming period is expected to be the maintenance of fiscal stability, decisions on new tax cuts with an emphasis on the middle class, the further strengthening of incomes, and the acceleration of procedures so that not a single euro of the Recovery Fund funds is lost.
The coming months are considered particularly crucial as, among other things:
The new minister, together with the other EU ministers, will have to negotiate the details of activating the national escape clause regarding defense spending. Athens seeks to gain as much fiscal space as possible as this will pave the way for new interventions for the benefit of citizens in the coming period. On April 10 and 11, Pierakakis will be in Brussels for the Eurogroup and Ecofin meetings, where one of the main topics of discussion will be the issue of defense spending.
By Easter, Athens should submit the revised National Recovery Plan “Greece 2.0” where projects (from the subsidies section) that appear to be at risk of not being completed by August 2026 (when the Recovery Fund is completed) should be replaced either with new ones or the budget should be strengthened for reforms or investments that already exist.
Depending on the decisions that will be taken regarding the escape clause and the fiscal space that will be created by the exemption of defense spending, in connection with the course of the budget and the revenues from tackling tax evasion, the package of reliefs that the Prime Minister will announce at the TIF in September will be finalized.
Changes in taxation
Based on these data, the government is already planning the agenda of new tax reliefs. Among other things, changes in taxation are being considered, such as:
The implementation of a new tax scale with rates that will lead to relief for incomes up to 40,000-50,000 euros. These are incomes that define the middle class.
The reduction and then abolition of the set of presumptions
The further reduction of social security contributions for employees and businesses by 0.5%.
Also on the table is a reduction in the taxation of rents.
