The Greeks have really done it

According to official figures Greece has recorded a budget deficit in its GDP of 6.1 per cent, that is exactly twice as large as that allowed by the Growth and Stability Pact. To be fair, Greece had massaged figures in order to get into the single currency and has never actually been within the allowed margins.

This, however, goes beyond any previous achievement and is the highest deficit recorded by any member of the economic and monetary union since 1999. The figures may not be entirely unconnected with the financial black hole that was last year’s Olympic Games.

Meanwhile, in another part of the Union, Eurostat has announced that Italy may well overshoot the 3 per cent mark. Not that Italy has ever been within the boundaries but this statement from an organization, whose own financial affairs could do with a closer examination, drew a blistering response from Prime Minister Berlusconi, already busy smiting enemies all around him:

“We're pretty tired of all this bureaucracy. We are really determined to do battle over this because Europe's job should not be to create difficulties for member states, but precisely the opposite.”

I am not sure where he gets that last idea from but it is a good line and in politics presentation is nine tenths of the game. Italy is one of the countries that is fighting to losen the constraints of the Growth and Stability Pact, a move that is being resisted by the Commission and various fiscal disciplinarians such as the Netherlands.

Germany, in deep economic trouble, wants to exempt its massive payments into the bottomless pit of the former East Germany since 1990. France wants an exemption for spending on defence and research, a somewhat less justified and more cynical ploy. Italy wants to leave out spending on infrastructure.

Economists, such as those at Goldman Sachs, maintain that the latest figures prove the need for economic discipline though they do not explain why that discipline should be created arbitrarily by bureaucrats at the centre of the European Union.

Nor do they explain how that discipline can be imposed on small countries like Greece (and part of the discipline is the extraction of massive fines that would, if applied, create an even bigger problem) while Germany and France manage to get off scot-free each time.

In the meantime the Greek government has explained the problem in its own way. A statement from the Finance Ministry blamed it all on the fiscal disorder left behind by the previous, Socialist, government (may even be true) and promised financial transparency in future.