With the energy crisis and high prices consistently ranking as the number one issue in all opinion polls, the government is heading towards the polls along a difficult and demanding path.
Citizens “vote with their wallets”, as the saying goes, and the Maximos Mansion is seeking ways to manage this challenge at an exceptionally difficult time.
The equation facing Kyriakos Mitsotakis and the economic team is complex: how to limit the impact of intense inflationary pressures without disrupting the fiscal balance that is a cornerstone of economic policy.
Initiatives are being pursued on two fronts, European and national, in search of additional tools to provide support in a crisis that, the government stresses, is being fuelled by international geopolitical developments and wars.
After the European Council summit in Brussels, the prime minister put the need for greater fiscal flexibility at the centre of the debate, so that member states can take additional, targeted and temporary measures under the current pressures.
The fact that “the European Commission is positive about this”, officials say, is a first step. The question now is whether member states will allow governments to step up their interventions without facing new fiscal constraints.
Greece is seeking a European framework that recognises the exceptional nature of the crisis and gives governments more room to respond, although Mr Mitsotakis is keeping expectations in check: “I do not expect ‘rabbits to be pulled out of hats’ or there to be magic solutions at European level that would allow us to cut taxes across the board and make an intervention on a massive scale,” he said.
At home, the government’s argument rests on the fiscal headroom built up in recent years. It says the economy’s positive performance and the achievement of surpluses allow Greece to spend more than €1 billion supporting society, unlike other countries facing tighter fiscal constraints.
At the same time, the government insists that its measures are not limited to the announcements of recent weeks, but form part of a broader package of support, tax relief and income increases.
Heating oil
Heating costs are a priority, with winter just around the corner. Under the government’s plan, a subsidy at the pump, combined with a contribution from refineries, is expected to keep the price of heating oil below the level it might otherwise have reached.
At the same time, around 1.2 million people are expected to qualify for the heating allowance, with income criteria widened.
Ultimately, the government’s gamble will hinge on whether the measures can provide meaningful relief to households. High prices remain one of the biggest problems facing citizens, with price rises affecting the overall cost of living.
The government has ruled out large-scale, across-the-board tax cuts and measures without clear funding, warning that breaching fiscal limits could undermine the country’s economic stability. Instead, it insists on the need for targeted support, with an emphasis on the groups most in need, although the duration and any further intensification of the crisis remain uncertain.
In response to opposition calls for stronger measures, the Maximos Mansion says additional benefits must be backed by specific resources and remain within fiscal limits.
“If they believe we are going to break the bank and hand out money left and right to win political favour, undermining all the effort we have made in recent years so that we might become a little more popular ahead of the election, then I am sorry, but I have shown many times that this is not my way of thinking. It may be the way some others think — those who drove the country onto the rocks in the past,” Mr Mitsotakis told reporters.
For him, the energy crisis is not only a difficult economic equation but also a crucial test of political credibility. He must prove that his government can use the fiscal headroom available to it, press for greater flexibility from Europe and turn its measures into tangible relief for citizens.
A decisive gamble for what comes next.