European billions are running out: will the Greek economy survive after the Recovery Fund?

Greece has submitted its latest applications for payments from €35.95 billion recovery fund. The government talks about the successful completion of Greece 2.0, but already in 2027 the economy will be left without the powerful investment impulse of recent years. The main question is what to replace it with.

The last application is not an early finish

On September 30, Greece sent the last requests for payments under the program to the European Commission Greece 2.0. However, representing this as an early termination of the program is not entirely correct: 30 September was the pan-European deadline submission of final applications.

According to euronewsGreece’s total package is about €35.95 billion: €18.22 billion in grants and €17.73 billion in concessional loans.

The government estimates the program’s contribution very highly: by 2025, it allegedly added about 11 percentage points to real GDP, helped create almost 600 thousand jobs and significantly increased investment.

This is a government estimate. But even if treated with caution, the scale of the RRF’s impact on the economy is difficult to deny.

The main accelerator disappears in 2027

European Commission directly links high investment activity in 2026 to record inflows of RRF funds.

After completion of the program, investment growth should slow down, and the GDP growth forecast is reduced from 1.8% in 2026 to 1.6% in 2027.

The Bank of Greece goes even further: it expects in 2027 strong negative change in public investment precisely due to the end of payments from the RRF.

This is especially important given the fact that the country has not yet completely closed the investment gap that accumulated during the debt crisis.

As we showed in a recent article “Greece’s economy is growing, but still 10% below 2009 levels»the country’s real production base is still noticeably inferior to the pre-crisis level.

There will be no break – but the effect will weaken

However, on January 1, 2027, the tap with European money will not be completely turned off.

Already launched projects will continue, and payments on the RRF loan portion to end enterprises will be able to go through banks until 2029. The Bank of Greece is also counting on EU structural funds, a national public investment program and new European instruments.

The head of the Bank of Greece, Yiannis Stournaras, therefore does not speak of an “investment cliff”, but of a gradual transition.

But the transition will be successful only if European funds have time to launch independent private investment, productivity growth and new production capacity.

How will ordinary residents feel?

Here the picture is less festive. The European Commission forecasts inflation in Greece to be around 3.7% in 2026 and recognizes that expensive energy reduces real disposable income and inhibits consumption.

In practice, families simultaneously face rising costs for food, housing, energy and services.

We have already discussed this gap between macroeconomic statistics and the situation of households in the materials “Why doesn’t Greek economic growth lead to higher wages?» And “The economy is growing, the Greeks are getting poorer».

You’ll have to choose where to send your money

A direct connection “RRF has ended – the state is cutting benefits” cannot be made. Most pensions, OPEKA benefits and social security benefits are financed from other sources.

But budgetary pressures are indeed intensifying. The government simultaneously needs to maintain a surplus, reduce debt, finance defense, support investment, and compensate the population for the consequences of expensive energy and inflation.

The weaker economic growth is after the RRF, the less space there will be for new broad social programs.

That is why it is more correct to perceive the latest application of Greece 2.0 not as the end of a successful story, but as begins testing whether the Greek economy can grow without emergency European funding.

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