Μake us preferred on Google The Greek government is laying its preliminary budget plans for 2027 in Parliament a moment of acute economic turbulence, with energy markets in turmoil, persistent inflation that keeps climbing higher and some of the plan’s core assumptions already at risk of revision. Such is the degree of uncertainty, that several of the figures included in the preliminary budget may have to be changed before the final 2027 budget is submitted to Parliament in November.
According to the draft submitted to Parliament on Monday, the government expects growth to accelerate to 2.3% in 2027 from 2% this year, while inflation is forecast to ease to 2.6% from 3.8% in 2026, assuming international energy prices gradually decline. Unemployment is projected to fall to 7.9% from 8.4%, its lowest level since 2008, while investment is expected to grow by 7.9%. The draft forecasts a primary surplus of 3.3% of GDP in 2027, down from 3.6% this year, and sees public debt falling to 128.8% of GDP from 136.7%. It also sets aside €200 million for possible needs arising from the energy crisis.
Even so, the government is maintaining its 2% growth forecast for this year. Officials expect tourism, faster investment through the European Union’s Recovery Fund and a series of support measures, whose impact should be felt in the economy before the end of the year to help offset the pressure from higher prices. More than €1 billion is expected to reach certain Greek households in November, largely through a €400 payment to pensioners over 65 and rent refunds for more than 1 million households.
Tax Cuts and Income Support
The preliminary budget also incorporates the package of tax cuts and income support measures announced at the Thessaloniki International Fair in early September by the Prime Minister.
Amongst the measures introduced are:
- About 156,000 self employed workers who are up to date with their tax obligations would be exempt from certain adjustments based on turnover and payroll that are currently used to calculate minimum taxable income.
- The elimination of income tax on earnings of up to €20,000 for full time farmers and parents with three children.
- A permanent annual payment made in November to pensioners, people with disabilities and elderly people without pension coverage that will rise to €400 from €300. From November 2026, the payment will be extended to all pensioners over 65.
- Public sector employees are also due to receive a €500 gross Christmas payment beginning in 2027.
- The creation of a state backed investment account for children during their first two years of life. The government would match a parent’s annual contribution up to €1,200, with contributions continuing until the child turns 18.
- Social security contributions in the private sector are scheduled to fall by 0.5 percentage points from April 2027.
- The phase out of the annual business levy. It would be abolished in 2027 for the 2026 tax year outside Attica and in Thessaloniki, cut by 50% in Attica in 2028 and eliminated there in 2029.
- Advance income tax payments for self employed workers would fall to 50% from 55% beginning with the 2027 tax year.
- For companies, advance tax payments would be reduced gradually from 2028, falling by 5 percentage points a year until they reach 50%, from 80% today.
- Businesses investing in machinery would also be allowed to depreciate that equipment over six years instead of the current 10.
- Disability benefits would be adjusted for inflation, while ENFIA, Greece’s annual property tax, would be abolished from 2027 for primary homes worth up to €400,000 in settlements with populations of up to 2,000. In Western Macedonia, the population threshold would be 2,200.
Further Legislation Expected
The legislation that incorporates all the new measures is expected to be put out for public consultation before being submitted to Parliament. Separate provisions are also expected to be approved by the end of October allowing overdue tax and social security debts incurred through the end of 2024 to be repaid in as many as 120 installments. New rules governing loan servicing companies are also expected.
With information from TA NEA
