Greece Unveils €2 Billion Income Support Package Ahead of 2026 Elections

Greek Prime Minister Kyriakos Mitsotakis is set to announce a package of economic relief measures worth over €2 billion ($2.33 billion) on Saturday, aiming to shore up support ahead of next year's elections. The plan, equivalent to roughly 1% of GDP, includes pension increases, a minimum wage hike, tax relief for self-employed professionals and small businesses, and support for farmers.

The announcement comes as the ruling center-right party, which won the 2023 election with 40.5% of the vote, has seen its approval rating slip to around 29%. This decline is attributed to a persistent cost-of-living crisis and recent corruption allegations. Government officials say the measures are designed to reach nearly all social groups without endangering fiscal stability.

Funding for the package, which is slated to take effect in 2026 and 2027, will come from strong economic growth, a larger-than-expected budget surplus, and improved tax collection. Some tax breaks are expected to be phased in over a four-year period. Greece's economy is currently expanding at an annual rate of 2%, and the government projects a primary surplus of about 4% of GDP this year, nearly double initial estimates.

Despite these positive indicators, challenges remain. Unemployment stands at 7.9%, above the EU average of 6.1%, and average monthly incomes remain at pre-crisis levels of around €1,500. Meanwhile, food, energy, and rent prices have surged by at least 30% since 2009. The measures follow widespread farmer protests in December over low product prices and high costs, as well as a farm aid fraud scandal that led to resignations and an EU fine. Labor unions have scheduled demonstrations in Thessaloniki for Saturday evening, demanding more substantial wage increases and lower prices for essential goods.