Prime Minister Kyriakos Mitsotakis chairs a cabinet meeting after the summer break, at the Maximos Mansion in Athens, on August 29, 2025. [Giorgos Zachos/InTime News]
The annual handouts expected from the prime minister’s keynote speech at the Thessaloniki International Fair (TIF) must fit within the spending raise limits agreed by Greece and the European Commission until 2028.
This year, this translates into a €1.5 billion package expected to be announced by Prime Minister Kyriakos Mitsotakis, and which will essentially include tax breaks for the middle class. For the next TIF, only €600 million is certain to be used to provide relief in 2027.
It is more than likely, however, that these €600 million will increase if the 2025 budget manages, like its predecessor, to exceed its revenue target, creating “fiscal space” for subsequent years. The margin is not that big, though. Extra spending is allowed only if additional revenue is found on a permanent basis, for example, if new taxes are imposed or if tax evasion is successfully limited. An alternative would be, for some reason, to claw back approved spending in order to leave space for extra spending in subsequent years. Something like that happened this year. An eventual increase in revenue that can be attributed to circumstantial factors, such as a banner year for tourism, can only be used to pay down Greece’s still considerable debt.
Economic officials point out that the main issue for the Greek economy now is to emphasize the transformation of the country’s production model. “Inflation and the balance of payments deficit are manifestations of excess demand,” the governor of the Bank of Greece, Yannis Stournaras, is reported to have told government officials, emphasizing that supply must also increase.
In particular, in order to increase the supply of labor, he proposes legalizing immigrants and increasing the participation of women, while at the same time speaking about the need to increase production per individual. “We are a country with too few producers of goods and services,” he has commented.
According to its medium-term plan, Greece is entitled to increase its spending in 2027 by €3.1 billion. But, increases in operating expenses and pensions will absorb €1 billion, civil servants’ salaries another €300 million and other expenses (e.g. clawback) approximately €200 million.