It’s yet another lonely morning at Peter Voudouri’s shoe
store in suburban Athens.
On what once would have been a bustling Saturday morning, a
single customer arrives with an attitude in line with the austerity tightening
household budgets across Greece.
The woman wants to buy shoes for her four year old daughter,
but her opening line is to begin bargaining to bring the price down.
“I asked for small shoes for a formal dress for my child and
I am asking if there is a better, lower price,” she tells me.
Listen to my report on the Greece economy broadcast on the ABC's Correspondents Report
Listen to my report on the Greece economy broadcast on the ABC's Correspondents Report
This is the reality in Greece these days as the latest
austerity cuts a swathe through consumer spending and capital controls –
measures to limit withdrawals from banks – stagnates the already downtrodden
Greek economy.
Great shoes - few customers. Peter Voudouri says austerity hit grandparents are staying away Ptcure: Peter Ryan |
In what is now a damaging consumer cycle, the damaging of
cuts to pensions means grandparents have less money in their wallets and no
longer spend up as the dote on their grandchildren – sometimes handcrafted
shoes from France and Italy.
“Grandparents are our basic customers in our kind of business
because they want to get presents like new shoes for their grandchildren in
comparison to their parents,” Peter Voudouri says.
“And it’s not only shoes but any present for their
grandchildren – toys, clothing. It’s not only the shoes.”
Without controls limiting transactions
and a financial lifeline from the European Central Bank, Greek banks would
almost certainly collapse tipping the nation into a deeper economic and social
abyss.
But Peter Voudouri says business is
paying a massive price.
The controls mean significant delays
in getting accounts paid and also paying suppliers. The cost of some
transactions has surged by 3000 percent adding a new layer of costs for already
struggling businesses.
The harsh medicine in return for
another financial bailout means business of all sizes are going to the brink,
says Constantine Michalos of the Athens Chamber of Commerce and Industry.
“The situation of the Greek economy
can only be described as absolutely stagnant,” Mr Michalos told me in his
Athens office.
“The implementation of capital
controls is making life on a daily basis extremely difficult for the
transactions that businesses need to carry out.”
In an example that illustrates the
impact of the capital controls, Constantine Michaelos says Greek businesses are
being choked with restrictions that would stun companies in Australia.
“Today if you set up a new business,
you are not allowed to open a bank account. You can’t open a new business
account.
“So you can imagine it’s extremely
difficult, in some cases impossible, to transact business in this country.”
Constantine Michalos, president of the Athens Chamber of Commerce & Industry |
Capital controls are set to remain in
place until at least next year while Greek banks are recapitalised.
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