Why PM Mitsotakis is austerity-hit Greek economy’s best hope

Why PM Mitsotakis is austerity-hit Greek economy’s best hope

Thessaloniki, Greece– As Prime Minister Kyriakos Mitsotakis mounts the podium at the Thessaloniki International Fair to unveil his vision for a robust Greek economy, he already seems to have a fair wind behind him.

“People believe there will be change for the better in all things – in the market, in the economy, in education,” said Mariana Valetopoulou, a second-generation business owner in this northern port city’s market district.

She looked back on the left-wing Syriza government’s four-year rule with dread. “There was no police,” she said, looking at the street outside her shop that sells sewing and knitting goods.


“They didn’t intervene for any reason. There was lawlessness… There’s already more police.”

Mitsotakis came to power in July at an auspicious time for the economy. After contracting by a quarter in 2010-18, the economy grew by 1.9 percent in the second quarter. Unemployment was falling steadily and exports rose by seven percent in July alone.

But the arrival of Mitsotakis and his conservative New Democracy (ND) party seems to have galvanised hope in the tax-stricken society. Consumer and business sentiment are at a 12-year high.

Global markets have given him a vote of confidence, dropping Greece’s cost of borrowing by two percentage points since the election was announced in May. The country’s 10-year bond traded at 1.59 percent interest on Friday, a rate not seen in over a decade.

Abolishing taxes

In his first month in office, Mitsotakis delivered on a promise to cut a roundly despised property tax by a fifth. He plans to abolish or reduce other taxes introduced during the country’s long depression.

Greece’s new gov’t says tax cuts will boost jobs and investment

This month, he is expected to legislate a four-point tax cut for businesses to 24 percent, followed by a further four-point cut next year. The lowest income tax bracket is to drop by more than half to nine percent.

“I agree completely with what ND has done so far,” says Eleni Karakoli, who owns a fruit stand at a farmers’ market along with her brother.

“My mother gets a pension of 400 euros and survives thanks to us. I hope he passes the tax cuts. The previous government was a disaster. Thank goodness they’ve gone. Our hopes are pinned on this government.”

If growth pays for these cuts, as Mitsotakis expects, he plans to ask Greece’s creditors for a renegotiation of the country’s rate of debt repayment next year. Greece currently spends 3.5 percent of its gross domestic profit (GDP) repaying debt.

Mitsotakis’ rapid delivery on some election promises seems to have pleasantly surprised Greeks. A poll published in Ta Nea newspaper on Friday suggests that he would win a general election by 43 percent, three points higher than his July victory.

It also suggests that two-thirds of Greeks approve of his controversial move to allow police into university campuses, which anarchists and petty criminals have often used as safe havens.

‘Foreshadowing a presidential system’

Mitsotakis has often expounded his vision of revolutionising the Greek economy through investments in renewable energy, waste management, tourism, quality agriculture and information technology.

He envisions a state that embraces meritocracy, transparency and accountability, casting off the reputation for corruption that has put Greece at the bottom of the European Union in Transparency International’s Corruption Perception Index.


His first legislation suggested he means business. It bound his ministers to annual performance goals and creates an all-powerful secretariat answerable to himself, designed to keep them on track.

“This enables him to monitor the government absolutely,” says Panayotis Karkatsoulis, a retired professor at the School of Public Administration in Athens.

“It’s as if Mitsotakis is foreshadowing a presidential system. His ministers are effectively becoming secretaries. If this cabinet office works… it essentially supplants the entire government.”

Karkatsoulis says Mitsotakis’ four predecessors tried and failed to become masters of Greece’s notorious state machinery, which Mitsotakis believes costs the economy seven percent of GDP. “If this concentration of power succeeds, he has won.”

Shortly after winning the election, Mitsotakis told his MPs that he wants his government to be “the best since the restoration of democracy” in 1974.

“With their vote, [Greeks] did not simply change government. They’ve overcome an entire historical period,” he told parliament on July 20. “Greeks are tired of big words and big mistakes. They’ve been tested by populism and incompetence. They want fewer promises and more tangible results.”

If Mitsotakis makes good on his pledge to pass 10 growth-oriented bills this year, he would give his government a more auspicious start than most adult Greeks can remember.

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