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Greece: The Greek Economy - Mike Saunders, Snobby Homes

People in glass houses...

Living in Crete as I do - and seeing the UK media’s supercilious reporting of ‘bankrupt Greece,’ it does not does not seem it’s the same country I am living in. So let’s get a few things straight.

It’s all very well taking the UK media’s arrogant approach of pillorying a mismanaged country borrowing too much, but people in glasshouses shouldn’t throw stones.

UK economists are saying Great Britain will be in the same boat as Greece with a similar budget deficit of around 12% of GDP. Government borrowing in 2010 alone is expected to hit 180 billion pounds. Is there any hoo-hah about that? No! What steps have the British government taken towards rectifying this horrendous borrowing? Nothing!

Greece is a small country without a manufacturing base, with a GDP amounting to less than 4% of the euro zone as a whole. Despite the furore on whether it will be bailed out by the EU, or calling in the IMF, Greece has taken draconian steps to bring down its deficit, and put its own house in order, without any outside aid. That should be applauded. When the UK economy ran into problems in 1976,with inflation running at 20%, the then Prime Minister Jim Callaghan had to run cap in hand to the IMF asking for help. Will history repeat itself this time?

It’s worth noting that Greece has taken steps to ensure its borrowings are reduced to the acceptable EU cap of 3% of GDP by 2012. On 16th March the UK government rejected calls by the European Commission to do more to cut its ballooning deficit. The UK is not expected to bring down its borrowing to the accepted level of 3% until way beyond 2015.

What about riots? What about the Greek economy?
Over the last two years overblown credit and poor lending by banks almost brought Britain to its knees. Greek banks were far more sensible and did not follow the same path as their counterparts in the UK and USA - and being a cash society, there is not the same heavy personal borrowing in Greece.

As you would expect, when a government brings in austere measures, there are always demonstrations, but that’s not the whole country up in arms. Think back to the Thatcher years, did we all publicly march in protest? Of course not. Mind you, what with increased fuel costs and rumors abounding that VAT in the UK is likely to be increased to 20%, will you be taking to the streets?

In Crete we recently had a protest by farmers who blockaded the main highway, preventing the movement of traffic. You can imagine the headlines. However, the blockade lasted half an hour, traffic was allowed to pass and thirty minutes later up went the blockade again for a further half an hour. How civilized!

Will I lose out if I buy a house in Greece?
Unlike the UK, Greece has not suffered from a plummeting housing market either. Consequently property prices have remained stable, with none of the fire selling of distressed sales that have gone on in Spain. Crete represents some 85% of the overseas property market in Greece and is recognized as being a prime holiday destination and popular location for buying property abroad. Due to this popularity EasyJet have just launched a new scheduled service of direct flights from Gatwick to Chania. This investment certainly bodes well and says a lot about the stability of the country and its continuing popularity.

VAT in Greece has just gone up to 21%, but on checking food prices, which attracts the full tax, groceries are still around 15% lower than in the UK. Mind you I recently read both the leading political parties in the UK are considering the option of putting 3% - 5% VAT on food!

The Foreign Office has just published research showing 42% of the UK’s 55+ age group are considering making the move abroad? Is it any wonder? You don’t pay council tax in Greece, the weather is glorious with 320 days of sunshine per year and a couple can still live really comfortably on an annual income of 12,000€.

Certainly from the increased response we are getting at Snobby, for homes in western Crete, there is a move afoot, which will only get stronger. Come on over. The water’s warm and life is good.

Mike Saunders

Mike is Marketing director of Snobby Homes, www.snobbyhomes.co.uk

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