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Greek holidays on hold as crisis hits

Athens stock exchange

Image: Greek Reporter

Just as Greece looked set to turn the corner, the country has been plunged into an uncertain future, thanks to a government decision to hold a snap election.

With its debts almost paid off and a record number of Greek holidays sold this year, Greece now faces the prospect of an exit from Europe and big problem on the economic front.

The Athens share index plunged almost 13% on a day already dubbed 'Black Tuesday' — the biggest single-day drop since 1987 — as investors took fright at the prospect of a snap election.

Despite being over the worst in paying back international debts, Greeks are still mightily fed up at the years of austerity, higher taxes and the prospect of more pain to come before the country can fully balance the books.

And the far right radical Syriza party is cashing in on public unrest by proposing tax cuts and bigger spending if Greece abandons its €245bn rescue package from the European Union and the International Monetary Fund and exits the Eurozone.

Syriza is currently ahead in the polls, with around 30% of the vote, enough to give it a place in government, if not overall control.

The decision by Greek Prime Minister, Antonis Samaras to call snap elections was completely unexpected and is widely viewed as a confidence vote in the current administration and a call on Greeks to continue on the current course.

The poll was not due until February next year but will now be held on December 17. A Syriza election victory could force a Greek exit from the euro.

Those in the UK planning a holiday in the Greek islands next year are likely to put plans on hold until the dust clears from this latest Greek crisis.

An exit from the Eurozone could actually benefit Greek tourism as any new Greek currency would almost certainly plunge in value from the day it is issued and make holidays in the Greek Islands a very cheap prospect indeed.

On the other hand, holidaymakers are notoriously unhappy about booking holidays in countries that are politically unstable, even regular holiday haunts like Greece.

The collapse in Greek shares has already had a major impact with the price of Greek 10-year debt falling steeply and pushing up the country's borrowing costs back above 8% — well above the level that most economists consider sustainable.

It comes just when there were signs of the Greek economy getting back to normal. Official statistics show that Greek GDP expanded for the first time in five years in 2014.

But output remains 30% down on 2009 and 25%r of the Greek workforce is still unemployed. The Greek tourism industry is the only one showing signs of strength with a record number of visitors so far this year and widely expected to top 21 million by the end of the year.

A few days ago, the Greek parliament voted for the first balanced budget since the 1998 crisis and the country was praised for recording a surplus on its books, the second highest in the eurozone after Germany.

But ordinary Greek people have paid a high price and the promises by Syriza to renegotiate the bailout package, put an end to austerity and increase pay packets is appealing to the Greek population and has given the party a 5% lead over rival parties.

Earlier this week Eurozone finance ministers agreed a two-month extension on Greece's bailout bill but only in return for further austerity measures, including a hike in VAT and further cuts in pensions.

The VAT hike alone looks set to add at least 5% to the price of a Greek Island holiday next year with more to come as the extra costs of Greek hotel owners get passed on to holiday customers.

What this means for next season's holiday market is anyone's guess but package tour companies such as Thomson and Thomas Cook will be expecting holidaymakers to hold fire until they see how this latest crisis is going to pan out.

Greek holiday plans look likely to be put on hold for the time being.

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