When I refer to a Greek Tragedy I’m not talking Aeschylus, Sophocles, and Euripides and the March Dionysia – for the classically educated amongst this readership.
No, rather I’m referring to the straitened state of the contemporary Greek economy. You may recall I blogged a few weeks ago concerning the austerity measures in Ireland (When Irish Eyes Aren’t Smiling) taken by Finance Minister Brian Lenihan – who is tragically suffering from terminal cancer but is making superhuman efforts to straighten Irish finances in what appears to be a final act of courage and leadership; putting country before self. In this blog I compare two different approaches taken to repair respective economic wreckage.
Ireland and Greece are joined by two other European countries (Portugal and Spain) making up a rather unkind acronym these ailing economies have become known as amongst economists and journalists in equal measure – ‘PIGS’ (Portugal, Ireland, Greece and Spain).
Greece’s 2009 deficit reached a massive 13.6% of gross domestic product (GDP). Just in case you’re beginning to feel smug the UK deficit for 2009 (according to the Office for National Statistics – ONS) was £159.2 billion, equivalent to 11.4% of GDP.
Comparing Ireland and Greece however, there is a marked difference of approach. Ireland has severely tightened its belt – especially through diminution of wages and pensions – reducing 6.1m public sector workers’ income by an average of 15%. However, all of this has been achieved in Dublin without the strikes or riots we’ve witnessed, via the media, in Athens. Greece, by comparison, has just secured a three-year, £95 billion bail-out from eurozone finance ministers. Whilst Greece has, in effect, secured loan money from Europe to address the problem it resembles paying off debt through a gigantic credit card.
Despite the cash injection the Greek Government is also taking unpopular employment measures – increasing the retirement age for women from 60 to 65 and scrapping bonus wages for Greek public sector workers. President of the Greek GSEE union, Yannis Panagopoulos, has declared, “It’s time to step up the social battle” – in a modern-day parody of a Greek Tragedy.
Whilst I have trepidation about UK finances it’s clear all three main political parties appear to concur public spending has to be reduced. With news breaking that we have a hung Parliament (the first time since 1974) it will be fascinating to see how the UK economic condition will be dealt with. Cut or spend to save the economy – what’s your favoured approach?