Greece’s finance ministry is preparing several versions of its autumn economic package rather than one, uncertain how much fiscal room it will have and working with far less than in recent years.
Those measures are traditionally set out at the Thessaloniki International Fair (TIF), where the prime minister lays out the government’s economic priorities for the year ahead. This year the planning has taken on a different character than at any point in the past six years. Rather than settle on one set of measures, officials are working through several at once, because of the number of unknowns, including how large the budget surplus will be.
The aim is to decide as late as possible, close to the end of August, once the picture is clearer on tourism, energy prices, tax revenue and Brussels’ first assessment of the 2027 budget. Unlike in previous years, this is closer to a scenario-building exercise than the design of a conventional pre-election package.
For the past few years the government had more room to move. Tax revenue kept beating targets, the economy grew, high inflation pulled more income into the tax base, tourists spent more, and EU recovery funds added a further cushion. Those margins are thinner now. A permanent tax cut has to be paid for year after year, at a time when Europe’s rules are tighter and its demands greater.
Tourism sets the tone
Tourism is the largest single variable. The ministry is looking past arrival numbers to what matters for the treasury: average spending per visitor, total travel receipts, VAT collection, the turnover of restaurants and services, and the data coming off electronic payments.
July and August have always accounted for much of the tax revenue collected in the second half of the year. A strong season raises receipts; weaker spending reduces them. Officials are also watching how instability in the Middle East might affect travel demand, and whether airline bookings hold through the peak weeks of the season.
Energy remains a risk
Energy is the second concern. The recent easing of tension in the Middle East has reduced the immediate pressure, but officials remain alert, as the situation could shift again. A fresh flare-up of the conflict between Iran and the US could push oil, gas and electricity prices back up, forcing the government to announce new support measures for households and businesses that would take up a large part of whatever room is available. Energy markets are under daily review, with officials watching Brent crude prices and how they feed through to inflation, transport, production costs and, ultimately, the public finances.
Reading the digital tax net
Much of the planning now hinges on how well Greece’s tax-collection infrastructure is performing. The networked cash registers, the myDATA e-bookkeeping platform, the digital client registry, electronic invoicing and automated transaction cross-checks together give an early read on whether revenue will keep outpacing forecasts.
The ministry wants full data on the first eight months before it fixes the package. Any revenue that comes in above target could fund permanent tax cuts. The measures on the table include a lower advance tax charge, reduced social security contributions, a cut to the annual levy paid by businesses and professionals, and relief for middle-income earners.
Brussels holds the last key
Then there is Europe. For the first time in several years, Greece is drawing up the package with the EU’s new fiscal rules fully in force. Budgets are now judged on net public spending and on adherence to each country’s agreed multi-year path.
Negotiations are also opening on the EU’s next long-term budget, covering 2028 to 2034. It will have to stretch to common defense, competitiveness, the green transition, further enlargement and the repayment of jointly raised European debt. Officials know the outcome will define Greece’s fiscal room for years, which is why they are holding the package back until the European Commission gives its first signals over the summer.
Not just how much, but for whom
The central question, officials indicate, is not only the size of the package but how the available room is distributed. The discussion turns on five areas: tax relief for the middle class, support for pensioners, measures for small and medium-sized firms, housing, and further cuts to social security costs.
Alongside that sits the question of how large a reserve to hold back for the winter, in case developments abroad force the government to support the economy again. That is why the final decision is being left as late as it can be. Any fresh information on tourism, energy, revenue or European decisions could still change the mix.
This year’s fair will be where the government tries to balance rising public expectations, its new commitments to Europe and an international picture that remains highly uncertain. The question is not only how large the package will be, but which of the plans being drafted now will survive the summer to reach it.
Source: OT.gr
