ATHENS, Greece — The plan to rescue Greece from bankruptcy has kicked in, and with a vengeance. As the government slashes spending and hikes taxes, the deficit is way down — but jobs are vanishing, shops are closing, and on the streets gloom is prevailing.
The European Union likes the swift action on the deficit. But few Greeks are in a mood to celebrate. Many predict an autumn of strikes and demonstrations as those who could afford a summer holiday return to grim reality.
On paper, the turnaround is working. The Finance Ministry said Friday the budget deficit has narrowed by a whopping 39.7 percent on the year, slightly better than the original target. The European Union, which demanded the cuts in return for bailout loans, is positively purring.
On Thursday, the EU said Greece’s efforts to cut spending were “impressive.” Less impressed are shop owners, who say consumers have tightened purse strings, cutting down on the nonessentials. Higher taxes and cuts in civil-servant pay are removing the boost of government spending from the economy.
“Civil servants used to come in and buy a double espresso and something to eat. Now they get a single espresso and a cheaper sandwich,” said Constantinos Garyfallou, who spends about 15 hours a day running a coffee shop just off Athens’ central Syntagma Square and near several ministries.
Even small changes in consumer spending — 50 cents less per customer each day — could translate to a fall in revenue for his coffee shop of about $5,000 a month.
