Austerity Shrinks Greek Spending 10.6%

Continuing austerity measures took 4 billion euros ($5.38 billion) out of the pockets of Greeks in the last year, shrinking their disposable income by 10.6 percent – and it looks likely to become even worse with more pay cuts, tax hikes and slashed pensions being imposed by the government on the orders of international lenders.
Greece’s statistics agency ELSTAT presented the sobering numbers in a report which showed that in the third quarter of 2012 the disposable income of households and non-profit organizations in Greece dropped to 33.2 billion euros ($44.6 billion) from 37.2 billion euros ($50 billion) in the July-September 2011 period.
The slide is attributed to an 11.3 percent decline in workers’ salaries and revenues, along with a 10.2 percent reduction in social benefits and 17.7 percent increase in taxation on incomes and property.
ELSTAT data confirm that households’ disposable incomes have been falling steadily since the first quarter of 2010. The result of that has been the serious drop in consumption, which in the third quarter of last year amounted to 35.9 billion euros, ($48.3 billion) down from 38.2 billion euros ($51.4 billion) in the same period of 2011, i.e. a decline of 2.3 billion euros ($3.09 billion) or 6.1 percent. The rate of household savings also dropped, by 8.1 percent.
ELSTAT also announced that general government revenues in the third quarter of 2012, despite big tax increases across the board, fell to 21.1 billion euros ($28.4 billion) from 21.4 billion euros ($28.8 billion) in the same quarter of 2011, a loss of 300 million euros ($400 million.
Despite austerity, spending grew from 27 billion ($36.3 billion) to 29 billion euros ($39 billion) mostly because the government gave banks 6.9 billion euros ($9.2) billion in recapitalization funds to make up for losses they suffered as part of an enforced debt write-down that made investors take a 74 percent hit on their holdings of Greek bonds.