Cutter’s jaws could be widened to include tax-free level and pensions

In its efforts to reach a compromise with the creditors for the completion of the second bailout review, the government is examining a scenario whereby the automatic fiscal mechanism agreed last year (aka “the cutter”) would also include the reduction of the tax-free threshold and pensions. The cutter forces the Greek government to take corrective action if it fails to meet its fiscal target.

However, the scenario does not provide for the quantification of those particular measures or their introduction into legislation in advance, as the International Monetary Fund is demanding.