Communication: A new start for jobs and growth in Greece

The Greek people have gone through extremely difficult times since the financial and economic crisis started six years ago. The causes of the crisis built up over many years before they became visible. Weak competitiveness, low productivity, rigid labour and product markets and very large public deficit and debt levels brought the Greek economy to the verge of an imminent default in 2010.

Throughout these difficult times, the EU has stood by Greece, supporting it as a member of the EU family. In addition to EU financial assistance on very favourable lending terms, EU funds are the biggest source of foreign direct investment in Greece and a very tangible expression of European solidarity and support. The support and relief from which Greece has benefitted in recent years and will receive in coming years from the EU, Member States, other international parties and private investors amounts to more than €400 billion. This represents more than 230% of Greek GDP in 2014 or around €38,000 per Greek citizen. The amount of EU and international funds for Greece today already exceeds the US Marshall Plan devised for the whole of Europe after the Second World War.

A lot of effort was put into modernising and reforming the country, and in making the best use of EU funds in support of the Greek priorities. This work paid off: public finances and the banking sector were stabilised and important reforms were made in areas such as social insurance, pensions, health-care and labour market policy. Greece returned to economic growth with real GDP growth of 0.8% in 2014 and this growth was expected to strengthen further until uncertainty kicked in. About 100,000 new jobs were created last year and unemployment had eventually started to decrease. Private consumption started to increase for the first time in five years, and increasing confidence in economic recovery was reflected in higher investment in equipment for the first time since 2008.

The ingredients for achieving a lasting recovery are still largely there. The immediate obstacles to sustainable growth are tightening financing conditions, as well as the prevailing uncertainty over the Greek economic and political outlook. To return to the path of jobs and growth, Greece has to continue with reforms and tackle the structural challenges it still faces.

Taken together, the level of support to Greece from the EU and international partners is unprecedented and can make a significant difference in the years to come. The decisions reached at the Euro Summit on 12 July 2015 testify to the willingness of the Euro area to support Greece provided it takes the necessary steps to restore trust and credibility and return to sustainability.

The purpose of this Communication is to outline a renewed approach to the substantial means available from the EU budget to serve as a new start for jobs and growth in Greece. The Commission's intention to work with the Greek authorities to mobilise up to €35 billion to fund investment and economic activity, including in SMEs, in Greece was highlighted by the Euro Summit.

This Communication will complement the comprehensive set of reforms and commitments which Greece is in the process of implementing and which will underpin a stability support programme for Greece under the Treaty establishing a European Stability Mechanism.

ESO: Background information: A new start for jobs and growth in Greece: Commission mobilises more than €35 billion from the EU budget http://www.europeansources.info/record/press-release-a-new-start-for-jobs-and-growth-in-greece-commission-mobilises-more-than-e35-billion-from-the-eu-budget/

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