The Bank of Greece is sounding the alarm on Greece’s demographic crisis, highlighting in its Financial Stability Report that it poses a serious medium- to long-term fiscal risk for the country. Population aging and declining birth rates are affecting employment, tax revenues, and the sustainability of the social security system, making comprehensive policy measures necessary.
In this context, the tax measures announced by the government at the Thessaloniki International Fair (TIF) 2025 aim to boost household disposable income, reduce the tax burden on labor for middle and high income brackets, and address the demographic issue through direct support for families with children.
According to the report, the income tax exemption for young people up to 25 years old with income up to €20,000 facilitates their active participation in the labor market, while the reduction in taxation on rental income increases property owners’ disposable income and may enhance transparency and declared activity in the real estate market.
Measures targeting regional areas are also particularly significant, as they are expected to strengthen local economic activity, reduce regional inequalities, and support social cohesion. Overall, the announced measures are expected to have a positive impact on growth and employment in 2026 and 2027.
Stournaras: What he proposes to address the demographic crisis
However, as Bank of Greece Governor Yannis Stournaras emphasizes, tax interventions alone are insufficient to address the demographic problem. Their effectiveness can be significantly enhanced with complementary policies, such as:
• Investments in quality and affordable childcare facilities.
• Implementation of flexible working hours and housing support for young families.
• Strengthening healthcare services and providing special allowances, such as support for children’s education or assistance for new mothers.
The Bank of Greece emphasizes that combining tax and structural measures can enhance multiplier benefits for the economy, while contributing to social cohesion and ensuring fiscal resilience. Additionally, the report stresses that attracting productive investments requires a stable and business-friendly environment, with actions such as digitization of public services, reducing bureaucracy, accelerating justice delivery, and strengthening property rights protection. Furthermore, tax incentives for investments in research, development, and industry can boost the country’s growth potential.
In conclusion, Greece must simultaneously address the need for social support and growth prospects, as the demographic issue is not only a social matter but also a critical factor for long-term economic stability.
