By Maria Petrakis
Dec. 22 (Bloomberg) -- Greece’s parliament approved plans to keep the budget deficit below a European Union ceiling next year, risking public anger as the government curbs spending while the economy slows.
The budget was passed with 151 votes for, 146 against and one abstention, according to the results announced on state-run Vouli TV. With consumer spending slowing, the government expects economic growth to ease to 2.7 percent next year, a “difficult target” that may change, Economy Minister George Alogoskoufis said on Dec. 19. The fiscal deficit will be 2 percent of gross domestic product, below the EU’s 3 percent ceiling.
Prime Minister Kostas Karamanlis’s New Democracy party, which holds a one-seat majority in parliament, has been battered by almost two weeks of protests, sparked by the police killing of a teenaged boy on Dec. 6. Protests have increasingly focused on the government’s economic policies, with labor unionists, students and civil servants opposing attempts to cut the deficit from a forecast 2.5 percent of GDP this year by restricting spending, selling assets and cutting the nation’s pensions bill.
The spending plan includes new tax measures announced in September for small businesses and self-employed professionals. Those deepened a slide in support for the ruling party and allowed the opposition socialist Pasok party to take the lead in opinion polls for the first time in eight years.
Pasok Gains
Pasok’s lead over New Democracy stood at 38.5 percent to 32.5 percent in terms of voter preferences, according to a poll of 1,013 Greeks by Public Issue, published in Kathimerini newspaper yesterday. Pasok leader George Papandreou, the son and grandson of former prime ministers, was deemed best suited for prime minister by 35 percent, one percentage point more than Karamanlis. The margin of error is 3.2 percent.
The European Commission, the EU’s Brussels-based executive, expects Greek economic growth to slow to 2.5 percent next year from 3.1 percent this year, according to forecasts in November.
Karamanlis, who has rejected calls for early elections, is expected to change members of his government in the next month, removing some ministers tainted with involvement in a land swap scandal with a monastery. The reshuffle may also see Alogoskoufis moved from the post he’s held since March 2004, Eleftheros Typos newspaper reported on Dec. 17, without citing anyone.
To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net
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