Greek leader forecasts end to six-year recession

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Greece’s 2014 budget, which forecasts a return to growth after six consecutive years of deep recession, has been passed by MPs.

But its revenue and spending targets have been contested by the country’s creditors who have provided more than 240bn euros (£201bn) in bail-out aid since 2010 to keep the heavily-indebted nation from bankruptcy.

As expected, the government coalition of conservatives and socialists held together for the vote, with 153 MPs in the 300-member parliament voting for the budget, 142 voting against and one voting “present”. A deputy and ex-minister from the ruling conservative New Democracy party was absent and three MPs from the extreme-right Golden Dawn party, including its leader, could not vote, because they have been jailed pending trial charged with membership in a criminal organisation.

“This is the first decisive step in exiting the bail-out,” prime minister Antonis Samaras said.

He noted that the budget forecasts a modest growth for the economy, 0.6 per cent in 2014, the first positive figure since 2007. Greece has been through six years of deep recession that have shrunk its economy nearly 30 per cent. The economy will still shrink four per cent this year, still better than forecast earlier, as Mr Samaras noted.

Mr Samaras said his government had exceeded four of five major targets it had set this year, coming up short only on unemployment, which remains stuck above 27 per cent. But he said, there were “revolutionary” developments in 2013, such as a small primary surplus of 800m euros (£670m) and a current account surplus, both for the first time in decades.

The primary surplus – revenue exceeding spending, excluding the cost of servicing the debt – is set to rise to 3bn euros (£2.5bn) in 2014 and further in later years, eventually leading to overall surpluses. “It means that we will no longer need additional borrowing,” Mr Samaras said, adding that this meant that Greece needed only a further 10bn-euro (£8.3bn) “haircut” in its debt next year to make it viable. Creditors, who include the European union, however, argue further belt-tightening will be needed.