GREECE’S DEFICIT WAS back in the spotlight again today when it was revised upwards for the third time. Eurostat, the EU’s statistics agency today revealed that the 2009 deficit for Greece was worse than previously thought. It was revised upwards to 15.4 per cent of GDP (gross domestic product): previously, it had been at 13.6 per cent.
The beleaguered country’s finance ministry vowed that it would still pull the shortfall back to below the eurozone’s 3 per cent of GDP ceiling in 2014. It is aiming to get it down to 9.4 per cent of GDP this year.
The Greek prime minister, George Papandreou, said that Germany had to take some blame for pushing under-pressure countries like Ireland and Portugal to the brink of bankruptcy. He said that Germany’s insistence that there be a debt restructuring mechanism for financially-troubled eurozone economies put countries like Ireland and Portugal in an even worse position by sending bond yields soaring as confidence in their ability to repay loans plummeted.
It created a spiral of higher interest rates for countries that seemed to be in a difficult position, such as Ireland or Portugal. This could create a self-fulfilling prophecy,
said Mr Papandreou.
European Central Bank policy maker Axel Weber was also making himself heard today. He told the opening of Euro Finance Week that banks should be allowed to fold to avoid bankers getting morally complacent in the future.
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