Ben Chu: As the cuts hit home, inequality is fanning flames of rebellion

Share
Related Topics

Just how severe is Greece's austerity? The raw statistics are certainly alarming. This is the fifth year of economic contraction. The economy shrank by 5.5 per cent last year. Some forecasters expect a similar decline this year. Almost half of the population under 25 is out of work. But it is the human stories that paint the most vivid picture of suffering. There have been reports of children being put into care because parents cannot afford to feed them and whole families surviving on the pension of an elderly relative.

And austerity is driving the economy down further. Athens has imposed fiscal consolidation – spending cuts and tax rises – equal to 8 per cent of GDP over the past two years. It is true that other countries – Sweden in the 1990s and Denmark in the 1980s – have experienced austerity on a similar scale. But that was at a time when their neighbours were growing, sucking in exports. And those countries, unlike Greece, were also not locked in fixed exchange rate systems and could thus adjust with the help of large currency deprecations.

"For Greece there aren't any tail winds," says Gustavo Baggatini, an economist at RBC Capital Markets. And there is still more austerity to come. As part of the latest deal to unlock a second bailout, parliamentarians have voted to cut a fifth of public sector jobs by 2015.

And yet the distribution of pain has not been equal. There are still many wealthy Greeks who have pulled their euros out of the Greek banking system, squirreling their cash away in accounts abroad, or even pumping it into the London property market. Domestic taxes are still being avoided, despite the belatedly-imposed anti-avoidance measures. Those who have borne the brunt of austerity so far have been the poorest and least well-connected in Greek society.

There is no doubt that the Greek economy needs deep structural economic reform. But after the violence and destruction in Athens, the unanswered question is whether it is capable of pulling off such an adjustment in such a short space of time without experiencing a disastrous social explosion. We are about to find out.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Online Media Sales Trainee

£15000 - £30000 per annum: Recruitment Genius: Now our rapidly expanding and A...

Recruitment Genius: Public House Manager / Management Couples

£15000 - £20000 per annum: Recruitment Genius: Are you passionate about great ...

Recruitment Genius: Production Planner

£20000 - £30000 per annum: Recruitment Genius: This fast growing reinforcing s...

Recruitment Genius: General Factory Operatives

£18000 - £35000 per annum: Recruitment Genius: This fast growing reinforcing s...

Day In a Page

Read Next
 

If I were Prime Minister: Every privatised corner of the NHS would be taken back into public ownership

Philip Pullman
 

Errors & Omissions: Magna Carta, sexing bishops and ministerial aides

John Rentoul
Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee