Greek Prime Minister Kyriakos Mitsotakis is set to announce more than €2 billion in tax breaks, pension and wage increases and other relief measures as his government seeks to tackle cost-of-living pressures and recover support ahead of next year's election.

Greek Prime Minister Kyriakos Mitsotakis is set to announce more than €2 billion in tax breaks, pay rises and other relief measures on Saturday as his government seeks to tackle cost-of-living pressures and recover support ahead of next year’s election.

The package, worth about 1% of Greece’s GDP, is expected to include pension increases, another rise in the minimum wage, tax breaks for the self-employed and small businesses, and support for farmers, three government officials said.

Mitsotakis’ centre-right government, re-elected with 40.5% of the vote in 2023, remains ahead in opinion polls but its support ha

Tax breaks, pensions and minimum wage

The measures, which Mitsotakis will unveil during his annual economic policy speech on Saturday, are equal to 1% of GDP and will include pension increases, a new rise in minimum salary, tax breaks for the self-employed and small businesses, and relief measures for farmers, three government officials said.

“The measures will include almost all social groups and the farmers without putting at risk the country’s fiscal health,” one of the officials said without giving more details.

Strong economic growth, a higher-than-expected budget surplus and more comprehensive tax collection will help finance the package, which will come into force in 2026 and 2027, they said.

Some of the tax breaks will extend over a four-year period, a second official said.

Strong growth provides fiscal room

Greece’s economy is expanding at an annual rate of 2%, outpacing the euro zone average. It expects a primary surplus worth about 4% of gross domestic product this year, almost double its initial forecast, giving the necessary fiscal space to fund the new measures.

However, unemployment is at 7.9%, compared with the EU average of 6.1%, and GDP per capita in purchasing power is among the lowest in the bloc.

The average monthly income remains at 2009 pre-crisis levels of €1,500, according to Labor Ministry data, with food prices, energy and residential rents at least 30% higher since then.

Farmers and unions demand more

In December, thousands of farmers took to the streets to demonstrate over low prices of their products, high energy costs and a farm aid fraud scandal that sparked political resignations and drew a hefty EU fine.

Labor unions have planned demonstrations in Thessaloniki on Saturday evening asking for generous wage increases and lower prices for everyday goods and energy.