Greek store closures spike as recession, austerity return

AP News
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Posted: Jul 23, 2015 12:32 PM
Greek store closures spike as recession, austerity return

ATHENS, Greece (AP) — Giorgos Prasinoudis ran his motocycle repair shop in Athens for three decades, through good times and bad. Now a "For Sale" sign hangs outside the window.

Empty storefronts are again a feature of Greece's towns and cities as spending dries up in a crisis that put Greece's future in the euro in doubt. The tales of hardship are repeated up and down the country of nearly 11 million people.

In Pradinoudis' neighborhood of Koukaki, a bakery, grocer, barber and several clothing shops on the main commercial drag have disappeared behind whitewashed windows — all victims of the crisis.

"It's over for Greece," said Pradinoudis. "We won't recover for another 50 years."

The downturn worsened after the late-June decision by the Greek government to impose a series of strict controls on the free flow of money, with a paltry 60-euro ($66) a day limit on daily withdrawals from ATMs. Though banks reopened this week for the first time in more than three weeks, the ATM withdrawal limit is unchanged and cash is becoming scarce.

For an economy where cash payments are the norm, that's a huge problem.

Prasinoudis' wife and 11-year-old daughter have already moved to Germany — ironically the country blamed for many of the economic and social problems afflicting Greece. On Wednesday, the repairman sat drinking coffee on the sidewalk outside his repair shop, reflecting bitterly on his fate.

"I hope my daughter learns German and doesn't come back," he said. "Not even for a holiday."

Hardware store owner Costas Kitsos says sales have plummeted since capital controls were imposed on June 29.

"People come into the shop but they ask about the prices and don't buy anything," he said. "Everyone is scared to spend money because they don't know what will happen"

Locked out of international bond markets in the spring of 2010, the country has relied on foreign rescue money to pay its debts — on condition that tough austerity measures, such as cuts to spending and increases in taxes were imposed.

The cost has been huge. A million jobs, mostly in the private sector, have been lost since then — around a fifth of the country's workforce.

But after appearing to stabilize last year, the Greek economy has faltered again even as unemployment remains high. At last count, unemployment was still over 25 percent and more than 50 percent for the under-25s.

Alongside the capital controls, the government imposed a new round of austerity, raising sales taxes and levies on businesses, while maintaining emergency taxes on households that have eaten up disposable incomes.

Early Thursday, parliament approved a second round of measures demanded by rescue creditors for a new bailout.

Retail associations fear a return to the peak levels of unemployment around 2012 when they were hit by a surge of business failures.

Five years after the first bailout by Greece's partners in the euro currency and the International Monetary Fund, some 85,000 retailers have gone out of business and the sector has lost 45 percent of its income, according to the National Confederation of Greece Commerce.

Constantine Michalos, head of the Athens Chamber of Commerce, wrote a letter to the finance ministry this week urging the government to take urgent measures to help businesses stay open, particularly those struggling to import goods from abroad.

"In essence the bank holiday has not ended," he wrote. "The vast majority of Greek companies are half a step from going out of business."

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