Greece’s 2026 state budget enters Parliament today under intense political pressure—both inside and outside the chamber. While the government promotes its most ambitious tax reform in a decade, farmers across the country are threatening to escalate their mobilizations, and governing-party MPs are reporting growing discontent in their constituencies.
A brief moment of relief came with the announcement that Kyriakos Pierrakakis, Greece’s finance minister, has been elected President of the Eurogroup—the powerful body of eurozone finance ministers. The news lifted the mood within the ruling New Democracy party (“the blue camp”), but it has not eased the tension created by ongoing farmer protests or the lingering controversy surrounding OPEKEPE, the country’s agricultural payments agency.
A High-Stakes Parliamentary Showdown
The budget debate opens at 3 p.m. and will run until midnight on Tuesday, when MPs will cast their votes. Traditionally, the budget is one of the Parliament’s most significant annual sessions—a stage where government and opposition clash openly, with party leaders weighing in at the highest political level.
Before the debate, New Democracy’s parliamentary group will meet at noon under Prime Minister Kyriakos Mitsotakis, who will also attend the opening session. As customary, his final address before Tuesday’s vote will close the five-day confrontation.
Income Boosts and Lower Taxes at the Core
The 2026 state budget’s central objective is clear: to increase disposable income and reduce the tax burden on the middle class, young people, and families with children. This comes through a sweeping tax reform that the government describes as both economic and demographic in scope.
According to the Finance Ministry’s draft projections, Greece expects strong growth driven primarily by a surge in investment, high primary surpluses, further drops in unemployment—to its lowest level since 2008—and continued easing of inflation. The budget also incorporates the full package of support measures for young people, families, and pensioners previously announced.
Key Economic Forecasts for 2026
- GDP growth: 2.4% (up from 2.2% in 2025 and 2.3% in 2024)
- Private consumption: +1.7%
- Public consumption: +0.7%
- Total investment: +10.2% (nearly double 2025 levels)
- Exports: +4.5%
- Imports: +4.6%
- Unemployment: 8.6% (down from 9.1% in 2025)
Nominal GDP and Inflation Outlook
Nominal GDP is projected to rise from €249.6 billion in 2025 to €260.9 billion in 2026. Inflation is forecast to ease to 2.2%, down from 2.6% the previous year.
The government argues that the combination of tax reform and other measures unveiled at the Thessaloniki International Fair—Greece’s annual policy-setting event—will significantly boost growth. The restructuring of income taxation, particularly for young people, families with children, and the middle class, is expected to deliver an immediate increase in disposable income. Lower tax rates also mean that any future pay raises will benefit workers, pensioners, farmers, and freelancers more directly.
A “Demographic Tax Reform”
The government frames part of the package as a demographic intervention, designed to address Greece’s long-term population decline.
The measures include:
- Gradual abolition of the property tax (ENFIA) for villages with fewer than 1,500 residents
- Reduced VAT rates for remote border islands with populations under 20,000
- Lower taxes on rental income, combined with a one-month rent refund per year
- Reduced “living standard” imputed-income criteria for housing and other assets
- Exemption of dependent children from the minimum living-expense calculation
These changes aim to support rural communities, boost housing affordability, and encourage family growth.
Extra Support for Pensioners
Pensioners stand to receive meaningful relief as well. Measures include:
- Gradual elimination of the mechanism that offsets pension increases with “personal difference” (a legacy of Greek bailout-era reforms)
- Additional pension increases tied to GDP and inflation
- Annual €250 support payments given every November to low-income pensioners, uninsured elderly citizens, and people with disabilities
