If Greece was a company they’d be declared bankrupt and the administrators would be called in to try and salvage what they could. How has this wonderful country which I holidayed in for nine years in a row ended up in this situation?
I have to admit it was a puzzle to me as I was there (well – Corfu, one of its islands) only last year and despite the fact that the infrastructure is a bit basic, the locals seem to live a good life – and there’s the hub of it. The Greeks only pay tax when they feel like it and if they do declare their earnings, they generally grossly underestimate them. Even when caught, there’s a good chance the tax official will take a bribe to cancel the tax evasion penalty!
The statistics show that Greek revenue from income tax is a measly 4.5% compared to the EU average of 8%. Even as Greece’s GDP (the output of the country) was growing at 4% a year, its tax revenues were falling, which in economic parlance is virtually impossible!
Go into a garage to pay a bill and ask for a receipt and the price will go up – because the garage owner will have to declare the income. Apparently, half the doctors in the country declare an annual income of less than €30,000 which is a laugh given what you have to pay them when you’re ill on holiday.
And that’s it in a nutshell – Greece has been spending just like the UK Government only without the tax revenues to support it. The international money markets have spotted this and the price Greece has to pay to borrow in the money markets has risen to the point where they just cannot afford the interest payments. Do they default, i.e. not pay their creditors and be classified along with African and South American countries who regularly refuse to pay their bills? Or do they go cap-in-hand to the EU with the begging bowl?
Well, good old Greece has been playing hard ball, threatening to quit the EU and throw the single currency concept into utter chaos. Germany and France, who would suffer most if Greece pulled out of the EU, are desperately trying to come up with a solution but at the end of the day, they’ll have to dig deep into their pockets and bail the Greeks out. And, any billions they spend helping keep the doctors in the manner to which they’ve become accustomed will inevitably filter through to the good old UK because France and Germany will argue for a ‘re-balancing’ of the EU budget and we’ll have to pay more.
Finally – some career advice. Become a doctor in Greece – it’s a very well paid job!
PS - Nigel is up to his tricks again. Find out what he's been up to at http://monaconigel.blogspot.com/