The political dilemma supports State Budget Department in Parliament that rising inflation represents. And this is because, on the one hand, a general increase in wages fuels inflationary pressure, and on the other hand, its absence significantly limits the purchasing power of employees.

Thus, in the opinion of the Office, the consequences should be weighed and measures should be taken to prevent loss of income, especially for low-paid workers, while ensuring that there is no feedback from inflation and loss of competitiveness. However, the agency excludes those who receive the minimum wage because they do not believe that they affect the evolution of inflation.

In its quarterly report, the department headed by Francis Kutentakis, believes that inflation is one of the main risks that could affect the Greek economy in the medium term. As he points out, inflation, despite its positive impact on public finances, is the main reason for the decline in real incomes, especially those whose nominal growth does not match the rate of price growth.

A minimum degree of consensus had to be reached on the main lines of fiscal policy.

The second risk is associated with an increase in interest rates by the European Central Bank. As noted, this change in the ECB’s monetary policy is expected to slow growth in Europe, while the effects will be particularly negative in countries with high public debt, such as Greece.

The third risk recorded by the agency is associated with uncertainty due to the consequences of the war in Ukraine and the energy crisis, which could slow down economic growth in the coming quarters. Finally, the department also notes the political risk associated with possible difficulties in forming a government in the upcoming elections. Therefore, it is necessary to achieve a minimum degree of consensus on the main directions of fiscal policy in order not to raise doubts about maintaining the fiscal balance in the pre-election and post-election period, he emphasizes.

In its report, the agency points to a marked improvement in the state of public finances and even estimates a small primary surplus at the general government level of 319 million euros between January and July, compared to the primary deficit target of 10.5 billion euros. “Despite increased uncertainty due to the energy crisis, macroeconomic and fiscal indicators paint a relatively positive picture in the short term,” the office said in a report that also cited a GDP growth rate of 7.7% in the second quarter of the year. In fact, the office believes the government’s goal of capping the core budget deficit to 2% of GDP this year is achievable.