The Greek economy continues to contract and short-term growth rates have been further revised downwards. It is estimated that the economy contracted by 6.9 percent in 2011.

The recovery previously announced for next year will be further delayed with, at best, a stagnation of activity in 2013. It is only in 2014 that positive annual growth rates are expected to return, the European Commission said in its report on the Greek economy.

In a report on jobs and growth in the Eurozone, the Commission said that following a request from Greece in April 2010 and negotiations with the European Commission, the ECB and the IMF the European Council on 2 May 2010 agreed an economic adjustment programme for Greece covering the period 2010–13. A second economic adjustment programme was agreed by the European Council on 13 March 2012 covering the period 2012–14.

The overarching objective of that second programme is to durably restore Greece’s credibility for private investors by ensuring fiscal sustainability, safeguarding the stability of the financial system, and boosting growth and competitiveness.

Greece made mixed progress towards achieving the ambitious objectives of the first adjustment programme and important fiscal targets were not met. Several factors hampered implementation: political instability, social unrest, issues related to administrative capacity and a recession that was much more severe than previously projected.

Additional consolidation measures were therefore adopted throughout 2010 and 2011.

However, Greece substantially reduced the general government deficit between 2009 and 2011. The adjustment is much bigger than most other cases of fiscal consolidation in EU countries in the past. Large-scale financial assistance from the international community compensates for the fact that Greece is not expected to be able to return to market financing over the next three years.

Greece will need to use that time to underpin its fiscal consolidation measures by implementing structural fiscal reforms to generate expenditure savings on a durable basis and structural reforms to boost growth will need to be accelerated to improve competitiveness.

The report recommends that Greek must implement the measures laid down in Council Decision 2011/734/EU of 12 July 2011, as amended on 8 November 2011 and 13 March 2012, and the Memorandum of Understanding on specific economic policy.

Meanwhile, Economy Commissioner Olli Rehn, speaking during a press conference here, reiterated the need for commitments to be observed on the part of Athens and of its eurozone partners, in presenting the European Commission's recommendations for the improvement of the 27 EU member-states' competitiveness.

Asked which points of the memorandum could constitute an object of renegotiating with the Greek side, Rehn declined to comment, merely saying that Greece is experiencing a period of "pre-election democracy" and that he himself respects democracy.

He stressed, however, that the second adjustment programme is aimed at bringing Greece back into an orbit of recovery and that it constitutes a kind of "solidarity pact" between Greece and the remaining 16 members of the eurozone.