The inevitable fiscal adjustment

Slowly but surely, the tightening of fiscal policy will be increasingly felt no matter whose view of the new Stability Pact prevails in the European Union - the regulations promoted by France and Italy, which are adapted to the peculiarities of each European country, or the rigid view of Germany and its 10 backers, or something in between.

A few things are clear: According to the 2023-26 Stability Program submitted to the European Commission by the last New Democracy government, government spending on intermediate goods will be reduced by 1.1 billion euros and salary expenses by 730 million euros, in real terms, over a period of three years. This reduction will be reflected in the salaries of the public sector and in the quality of services provided by the state. The fiscal space will be very tight, up to 0.3% of GDP by the end of the next three years. This will be the...