Agreement, in principle at least, has saved Greece from leaving the euro. It now has to pass reforms demanded by the Eurozone by Wednesday. But first, some facts are warranted about how far Greece has actually come.
Of all the Euroland countries, Greece is the country which has implemented the deepest adjustments in terms of budget cuts. Between 2009, and the onset of Euroland’s crisis, and end 2014, the Greek government deficit has fallen from -15.2% GDP to -2.7%. Minus interest payments, Greece is running a structural surplus.This represents a cut of 12.5 points in the GDP, a colossal adjustment. By comparison, Spain’s government spend fell 5.1 points, Lithuania by 8.6 and Estonia by 2.3. Overall, Greece has slashed government spend by €47 billion.
Looking at the Greek statistics a bit closer, Athens is in the top league of Europe’s cutters. Ireland is number one, reducing government spend from 47.6% GDP to 36%; Greece from 53.9% GDP to 44.2%; and Lithuania from 43.7% to 34.1%.
These figures would suggest that the EU institutions will only be satisfied if Athens reduces expenditures to, say, the level of Ireland. In fact, the Greek economy has shrunk 27 GDP points, an unprecedented contraction since the depression of the 1930s.
Furthermore, Greece is the only Euroland member state to have lowered the minimum wage from €689 to €586 a month. It has done the most to make its labour market flexible and has seen wage levels fall by a quarter.