Greek austerity budget raises new fears of political instability

City A.M. Reporter
THE GREEK government yesterday unveiled its budget, which predicted a worse-than-expected recession in 2013 and halved its forecast for a budget surplus before debt interest payments are taken into account.

Chaos marked the budget’s release as Greece’s two biggest unions called a 48-hour anti-austerity strike for 6-7 November.

The predictions showed steadily worsening economic prospects are wiping out much of the boost from spending cuts demanded by its lenders.

It also revealed that the country is targeting a primary surplus of 0.4 per cent of gross domestic product in 2013, below the previous target of 1.1 per cent. That at least shows the country is on-track for a primary surplus for the first time since 2002.
Greece now expects the economy to contract 4.5 per cent next year – its sixth year of recession – up from the previous forecast of 3.8 per cent. Five years of recession have already shrunk the economy by a fifth and left a quarter of Greeks jobless.