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Green shoots of recovery but little relief for Greeks

Green shoots of recovery but little relief for Greeks

ATHENS: In Athens and across the eurozone, there is a cautious sense of optimism over an economic disaster that very nearly broke not just a nation but the European Union.

Nine years after Greece was first plunged into crisis, the country is anticipating a record tourist season this year, giving hope that recovery is finally on the way.

News that Aegean Airlines last week signed a $5 billion deal with Airbus for 42 new aircraft marked only the third fleet expansion by the nation’s largest carrier in almost two decades. Nationwide unemployment is dropping, from 27.9 per cent at the peak of the crisis in 2013 to 20.9 per cent today – although that is still more than twice the EU average.

Athens also appears to be limping away from EU bailout dependency.

Yet for many in Greece there has been no recovery, particularly among the once-healthy middle class. An old Greek maxim that small business is the cornerstone of the economy has been tested to the hilt. In a country still blighted by corruption and a bloated public sector, the small private businesses have not been given the opportunity to rebuild.

Dr Yianni Malliaris, 42, sits in a well-aired Athens office, the shutters open and the faint soundtrack of the street three floors down drifting in.

The clinical psychiatrist left a post at King’s College in London at the height of the crisis to return to Greece. “It’s the least corrupt part, it’s the least burdensome part of the Greek economy and it’s the most hardworking part of the Greek economy.

As Nick Malkoutzis, editor of the Macropolis economic blog, says: “The middle class has taken much of the burden during the crisis, and has been deeply affected by tax increases, wage cuts and unemployment, and the process of reversing this is a very important part of the Greek recovery.”

New taxes hit the middle class especially hard. Reforms to national insurance have turned it into a means-tested system with no ceiling, effectively rendering it a secondary income tax, and businesses have to pay their income tax up front every second year, leaving cash flows heavily depleted.