Tuesday, November 03, 2009

Socialist Government of Greece hikes taxes

Greece's newly elected Socialist government is set to unveil hefty new taxes Thursday to close the country's ballooning budget gap. But more attention will focus on whether the budget will include deep spending cuts and permanent measures to bring down the deficit.

"Given that a big part of Greece's deficits stem from excess spending, then that's where they need to start," said Ioannis Sokos, a strategist at BNB Paribas.

Greece is facing intense scrutiny by the European Commission after the country announced last month that its budget deficit will reach 12.5% of gross domestic product this year -- twice the previous forecast, issued most recently in September, and the highest level in the euro zone.