Greece lays its gauntlet – The question is will it bring home any goods

After what hail as a victory against the Trokia, others a drastic climb down and for one disgruntled member of Syriza a ‘renaming of meat to fish‘.

There is at least some degree of sovereignty in Greece now where there was not before. Whereby the budget can be set and priorities sorted in Greece this is what is happening now and it is happening for the first time since the last ‘deal’ was struck in 2012 once again Greece is in the driving seat of its own country. Vitally there has been talks of a loosening of the primary budget surplus (a government’s fiscal budget surplus excluding debt repayments), of which the levels are not finalised. I predict that a deal will be struck with the new aim of a 2% budget surplus, rather than the current target of 4%-4.5%. Though this is closer to the 1% preferred choice of both Yanis Varoufakis and Alexis Tsipras this still represents a contractionary stance and is this still austerity in a loosened sense.

The only palatable target at home in Athens and the rest of Greece where the support for the government’s stance on the negotiations was nearing 3/4 of the population would be and is Tax avoidance and evasion coupled with a general clamp down on fraud and corruption at all levels and in particular at the top.

As I mentioned before, there is clearly space for help from countries that have more successful tax collection systems and from those that could help in order to replace the reforms in Greece, which sadly have only led to horrible results thus far. One way that Greece has tried this on their own was to attach tax collection to energy costs which ultimately led to thousands of people losing access to energy and subsequently little extra tax revenue.

It has been leaked that there will be a streamlining of the civil service, which may or may not be productive in Greece. If the help can be sought from the other countries in the short to medium run then there will be more people with experience running these things across Europe that can help with making the process work.

Another concession as I mentioned in my last piece was that we should expect the ‘European Investment Fund’ to become a big player in investment spending in not just Greece but all ailing economies from Italy, Spain and all countries that took issue to Greece’s concessions over the past weeks and going forward.

I’ll update you all as I know concrete details. Follow the blog and me on Twitter @rwscarter to stay up to date.

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