Te n s o f t h o u s a n d s o fdisgruntled workers spilled intoGreek streets on Wednesday,registering their discontent withgovernment austerity measuresto control Greece’s spiralingpublic deficit and debt. Greece’seconomic woes have posed thebiggest challenge yet for the decade-old euro currency - and the 16 nations,including Greece, that make up the eurozone economy.
Greece has been a top subject in Brussels, where European Unionleaders registered support for Athens and its economic reforms this month -but offered no financial assistance.
The Greek government has promised to slash its public deficit fromnearly 13 percent of Gross Domestic Product to nearly nine percent of GrossDomestic Product by the year’s end. Greece’s debt is currently estimated atmore than $404 billion - or about 113 percent of its GDP.
Just how serious is the Greek crisis? Very serious, says economistPaula Subacchi of the Chatham House policy institute in London.
“The crisis is serious and it is serious for many reasons. One is becauseof the credibility of Greece. And the events of the past couple of days donot really improve confidencein the country and thereforeforeign investors are veryconcerned,” she said.
On Thursday, EuropeanEconomic Commissioner OlliRehn said he would personallyinspect Greek’s austerityplans after receiving a reportfrom EU, European bank andIMF auditors who were in Athens this week. Speaking to reporters, Rehnoutlined some of the spillover effects of Greece’s problems.
“The mood deteriorated in some segments at the start of this yearfollowing growing concerns of the fiscal situation in some countries. Thisled to sharp increases in sovereign bond spreads in the euro area as we haveseen recently - especially in the case of Greece,” he said.
The European Commission - the EU’s executive arm - says itwill be monitoring Greece carefully to see it lives up to its promises.
Commissioner Rehn says the Greek crisis serves as a lesson for theeurozone as a whole.
Several credit tracking agencies have downrated Greece’s creditrating and Standard & Poor’s warned it could do so again. That could putGreece in the high risk investment category, making it very difficult for thecountry to borrow money.
Polls show that despite the social protests, the majority of Greekssupport the government’s austerity measures. And Subacchi says it is criticalAthens sticks to them.
