With around €1 billion in fiscal space already available, and expectations that the strong performance of the state budget will create additional room by September, the Prime Minister’s office and the Ministry of National Economy and Finance have entered the most critical phase of planning for this year’s announcements at the Thessaloniki International Fair.

The question is not only which measures can be accommodated fiscally, but how to shape a package with the broadest possible social footprint – one that sends the political message that no major social or professional group is being left out.

The direction given by Prime Minister Kyriakos Mitsotakis is clear: the available fiscal space should be used in a way that spreads the benefits as widely as possible. After last year’s measures, which focused mainly on housing policy, young people and pensioners, this year’s planning places greater emphasis on the self-employed, small and medium-sized enterprises and legal entities, without excluding salaried workers, families, property owners and pensioners.

The aim is to create a balanced mix of tax relief, growth incentives and targeted support that reaches as much of society as possible.

At the same time, the government wants to present a fully costed plan that is compatible with the new European fiscal rules, as Greece gradually enters a pre-election period.

A screening process is already under way for proposals submitted by the relevant ministries and stakeholders, with the aim of forming a first complete picture before the August break of the measures that can be financed.

After that, National Economy and Finance Minister Kyriakos Pierrakakis will present the prime minister with a set of alternative proposals. The final announcements for the Thessaloniki International Fair will be decided after the summer holidays.

The available fiscal space plays a central role in the planning, as it will determine both the scale and the content of the measures to be announced at the fair. Based on current data, the government’s economic team believes it has already secured room of around €1 billion for new permanent measures in 2027.

However, the prevailing assessment is that this amount could increase by September, provided the positive course of public finances continues.

Much of the optimism comes from the execution of the state budget, which in the January-May period recorded a primary surplus significantly above target. Tax revenues also exceeded forecasts, mainly due to higher VAT and income tax receipts.

Although officials at the Finance Ministry acknowledge that part of the overperformance is due to temporary factors or the timing of revenues, they believe that if the same momentum continues through the summer – supported by tourism, consumption and anti-tax evasion measures – additional fiscal space could be created, allowing the final package to be strengthened.

These expectations also rest on the further impact of digital tools against tax evasion, the broadening of the tax base, the course of tourism and private consumption, as well as talks with the European Commission on the application of the new fiscal rules.

At the same time, the government is examining whether it can make use of the room provided by the European escape clause for specific investment expenditure, without jeopardising targets for high primary surpluses or the continued reduction of public debt.

The planning is also influenced by the guidelines of the Bank of Greece, which recommends that any additional fiscal space should be directed primarily towards three areas: targeted support for the most vulnerable households, permanent tax and social security contribution cuts that mainly reduce the burden on labour, and investment incentives that strengthen business productivity.

The central bank also warns that broad horizontal benefits have a high fiscal cost and limited effectiveness, stressing that permanent tax cuts can only be supported by a stronger tax base, a reduction in the VAT gap and the continuation of the fight against tax evasion.

It is no coincidence that many of the measures already under consideration by the economic team move in this direction. They include reducing the advance tax payment for businesses, abolishing the business levy for legal entities, further cuts to social security contributions, changes to income taxation, investment-related tax incentives and interventions linked to housing and the strengthening of household disposable income.