In a political landscape full of tensions and challenges, the “great bargaining” for the Thessaloniki International Fair (TIF) announcements has begun, with the government fighting strategic battles in Brussels for more fiscal breathing room to allow for benefits — and at the same time, facing growing internal party pressure in Athens for increased social support.

Once again, the country finds itself at a political and fiscal crossroads, centered around the measures the Prime Minister is expected to announce. The economic team is cautious not to “put the cart before the horse” before determining how much fiscal space is actually available for 2025 and 2026 — a factor that will ultimately decide what can be given and to whom.

Discussions are already underway — and perhaps after Easter, a more concrete picture will emerge — about what could be distributed and to which groups. The next 100 days, up to mid-July, will be decisive. By then, it should be clear what the relaxation of EU fiscal rules on defense spending will bring, how the national budget is performing in the first half of the year, and how much revenue from fighting tax evasion can be used to fund permanent tax cuts and other future benefits. Other factors at play include the international economic conflict triggered by the U.S., global trade restrictions and tariffs, the military spending race, and geopolitical tensions in Eastern Europe and the Mediterranean — all of which may impact both the European and Greek economies.
Who Stands to Benefit

The government’s economic team is seeking measures that will benefit as many people as possible, have a meaningful social footprint, and carry weight ahead of the Prime Minister’s announcements at the TIF. They are firmly against across-the-board handouts, saying, “the cost is enormous and the benefit limited.” They reject pressures based on the mindset of “Kyriakos, give it all away,” which, as they note in Syntagma Square, “historically never won elections for the parties that tried it” — and today would once again drag the country (and future generations) into “trouble.”

By June, preparatory work will be underway to select tax breaks and benefits that “have broader impact and send a real message — offering relief and growth prospects” to citizens.

Such measures could include, for example, income tax and ENFIA (property tax) reductions targeted at families with children — rather than universally — in order to have a more noticeable impact on their finances, while also sending a political signal and addressing Greece’s demographic challenges.

Based on current proposals — and the available fiscal space that will emerge — the “guaranteed measures” expected in 2026 include:

– Tax relief, reduction of imputed income criteria, and benefits for the middle class. Families with children and annual incomes exceeding €40,000 or even €50,000 are expected to be among the main beneficiaries.

– Affordable or Free Housing: Offers for affordable — or even free — housing are being planned for students, young couples, and public sector employees working away from home. These will be facilitated through the social exchange model (κοινωνική αντιπαροχή) or by reallocating EU structural funding (ESPA). The measure is designed to address demographic challenges and will benefit renting families based on social criteria, not through blanket policies.

– Rental Income Tax Reform: A reduction in tax rates on rental income is under consideration, particularly for landlords earning over €1,000 per month — where the tax rate currently jumps from 5% to 15%. The tax scale has remained unchanged for over a decade. The proposed revision aims to:

– Encourage accurate income declarations,

– Avoid penalizing compliant taxpayers, and

– Provide relief to tenants, who often shoulder the tax burden indirectly.

The plan may also include protective measures for both landlords and tenants, addressing problematic behaviors on either side.

ENFIA (Property Tax) Cuts: A revision of the ENFIA tax scale is being examined, potentially with greater reductions for families with children, rather than across-the-board cuts — to maximize both economic and social impact.

Salary Increases for Security Forces: Starting in October, members of the Security Forces are expected to receive new wage increases.

“Do it like Dendias!”

The recent salary increases for the Armed Forces triggered a wave of reactions and demands for similar raises across other public sector groups. However, the Finance Ministry points out that the military raises were almost self-financed, thanks to cost-cutting and internal restructuring within the Ministry of Defense — driven by the mass retirement of 1,700 senior officers at the top of the military hierarchy.

With fewer high-ranking personnel in the upper levels of the command structure, the ministry saved significant sums (about €30 million annually) in salaries and bonuses that would have otherwise been paid had those officers remained on active duty.

In contrast, such turnover and promotion dynamics do not exist to the same extent within the Security Forces, making it harder to replicate the military’s internal cost-saving model. Alternative benefits or efficiency strategies will need to be explored to meet similar demands in that sector — and likewise for other branches of the public sector, where any new benefits will require distinct financing mechanisms.
Brussels and the Limits of Fiscal Flexibility

Much will hinge on talks with the European Commission, especially concerning how much of the €2 billion in revenue from 2024’s anti-tax evasion efforts can be considered permanent rather than one-off — and therefore eligible to fund permanent relief measures.

These discussions and conclusions will be formalized in the post-bailout surveillance report to be submitted by the Commission’s technical teams by June. From initial meetings during their recent on-site visits to ministries, it’s already clear that across-the-board handouts — such as the reintroduction of 13th and 14th salaries or bonus pensions — are off the table.

According to the General Accounting Office, such benefits would cost the state around €8 billion annually (€5 billion for pensions and €3 billion for salaries). That figure rises further when factoring in the 22 separate salary-related benefits that have been granted or are in the pipeline from 2023 to 2026 for public sector employees.