Greek Economy Report Sent to Commission, Spending Capped at 3.6%

The Greek government is to submit its Economic Progress Report to the European Commission on Wednesday, April 30, in line with the revised framework of the EU’s Stability and Growth Pact.

A key component of the report is the establishment of upper limits on primary public spending, as mandated by the new fiscal rules. For 2025, Greece‘s spending cap has been set at 3.6% of GDP.

However, this limit may be adjusted slightly, taking into account a higher-than-expected primary surplus and increased revenue from efforts to combat tax evasion.

On Tuesday, Greece also filed a formal request for the activation of the “defense spending escape clause,” which would allow defense expenditures to be excluded from the budget deficit calculations. The European Commission is expected to issue its recommendations by mid-June, with a final decision due in July.

According to National Economy Minister Kyriakos Pierrakakis, the escape clause would free up an additional 600 million euros in fiscal space for 2026 alone. This space will help shape a package of tax relief measures that Prime Minister Kyriakos Mitsotakis is scheduled to unveil in September at the Thessaloniki International Fair (TIF).

At the heart of the upcoming relief package are planned cuts to income tax rates for the middle class, reductions in property taxes—including a possible elimination of ENFIA (the unified property tax) on primary residences—adjustments to the rental income scale, and decreases in both imputed living costs and social security contributions.

Officials from the economic team say the final size of the package will depend on a review of fiscal space in the coming months, based on tax revenue and budget trends. Early estimates put the relief measures at over 2 billion euros.

The Progress Report projects continued growth for the Greek economy, with GDP expected to expand by around 2% in 2026, following an estimated 2.3% growth in 2025.

Much of this growth is expected to be driven by the EU’s Recovery and Resilience Facility, from which Greece anticipates receiving over 6 billion euros in grants and loans.

The report also forecasts a primary surplus reaching 3% of GDP, exceeding the 2.4% target set in the national budget.