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Greek debt crisis: what Greece is prepared to do to stay in the Euro

Greece’s Government has submitted its reform proposals to European creditors in a final bid to secure a third bailout and avoid Grexit (the possibility of Greece leaving the Eurozone).

Eurozone finance ministers will examine the new proposals, which include pension cuts and tax rises, ahead of a full EU summit on Sunday. Correspondents have said Alexis Tsipras’s plan contains many elements rejected in a referendum last Sunday [1].

According to Greek media reports, some of the measures will include; €300m defence spending cuts by 2016, unifying VAT rates to a standard 23%, 13% for basic food and 6% for medicine, privatisation of ports and raising corporation tax by 2% [2].

This may come as a shock following the referendum last week, in which the Greek people voted ‘no’ to austerity and in favour of rejecting bailout terms.

Income tax may also be increased if ‘fiscal shortfalls’ appear in the Government’s finances, which could see low annual incomes taxed at 15% and other incomes taxed at 35% [2].

Retirement age would also be increased, alongside supplementary pensions for the poorest retirees being phased out by 2019 [2].

Duncan Weldon, economics correspondent for the BBC’s ‘Newsnight’ tweeted that it was “hard to see what the referendum has achieved other than lost time/economic problems”. Whilst Tsipras has reportedly told colleagues; “we are ready to compromise” [2].

[1] BBC News. ‘Greece debt crisis: MPs to vote on new bailout plan’. http://www.bbc.co.uk/news/
[2] The Independent. ‘Greek debt crisis: Alexis Tsipras tells creditors what he’s prepared to do to stay in the euro’. http://www.independent.co.uk/