In a sweeping move aimed at tackling Greece’s mounting demographic challenges and persistent cost of living pressures, Prime Minister Kyriakos Mitsotakis unveiled a 1.6 billion euro ($1.88 billion) economic package during his keynote speech at the 89th Thessaloniki International Fair on September 6, 2025. The ambitious plan, which has been described as the boldest tax reform in more than half a century, seeks to offer broad tax relief, targeted support for families and young workers, and incentives to reverse the country’s population decline.
“We know that the cost of living is one thing if you don’t have a child and another if you have two or three children,” Mitsotakis stated, according to The Guardian, emphasizing the need for the state to reward citizens who choose to have children. The centerpiece of the package is a permanent two-percentage-point cut in income tax for all taxpayers, along with a zero tax rate for workers under 25 earning up to 20,000 euros annually. Perhaps most notably, families with four or more children will pay no income tax at all—a measure designed to address Greece’s tumbling birth rate and looming demographic crisis.
Greece’s fertility rate stands at just 1.4 children per woman, far below the replacement level of 2.1, and the population is projected to fall from its current 10.2 million to well under 8 million by 2050. By that time, 36% of Greeks are expected to be over the age of 65, according to Eurostat. Finance Minister Kyriakos Pierrakakis noted that fertility rates have halved since the start of the economic crisis 15 years ago, and stressed, “Our taxation reform will give great emphasis to this problem … as head of the economic team, I’d say our top priority is the demographic issue.”
The relief package also includes substantial benefits for middle-income earners, pensioners, and uniformed personnel, who will see pay increases. Property tax (ENFIA) will be halved in villages with fewer than 1,500 residents by 2026 and abolished entirely in 2027, encouraging young people to move from cities to the countryside. The government will scrap real estate tax for remote areas and invest in affordable housing by developing properties on abandoned military sites, aiming to make rural life more attractive, especially for young families.
These measures, Mitsotakis argued, are made possible by Greece’s recent economic turnaround. After a decade-long debt crisis that nearly pushed the country out of the eurozone, Greece’s economy has rebounded, driven largely by tourism, falling unemployment, and improved budget discipline. “The former crisis country now has one of the highest economic growth rates in Europe,” Mitsotakis said, as reported by Keystone-SDA, pointing to an unemployment rate now at 8%—down from a staggering 28% at the height of the financial crisis. Youth unemployment, which once soared to 60%, has also dropped significantly.
Greece’s fiscal position has improved so much that its ten-year government bond yields have fallen to 3.33%, now even below France’s 3.44%, a symbolic reversal from a decade earlier when Greece had to borrow at punishing rates. “Fiscal stability is the foundation of our policy,” Mitsotakis insisted, stressing that growth dividends should return to citizens through lower taxes rather than handouts.
The prime minister also outlined four long-term reforms requiring cross-party consensus: a national high school diploma for university entry, a modernized public health system, streamlined zoning and a complete land registry, and a national energy roadmap to secure affordable electricity and autonomy. “2026 and 2027 are milestones, but our destination is 2030,” Mitsotakis said, framing the tax cuts and reforms as part of a broader strategy to strengthen growth, support families, and modernize the state.
Despite these positive economic signals, Greece remains Europe’s most indebted nation, with public debt over 150% of GDP and disposable incomes still trailing the EU average. Rising energy, food, and housing prices continue to erode purchasing power, even after a cumulative 35% minimum wage increase. According to ekathimerini and Reuters, thousands of Greeks are struggling to make ends meet, and the government’s popularity has suffered as a result, with the ruling New Democracy party’s poll numbers dropping to around 22-25% since June 2025, down from 41% when it came to power in 2019.
The cost of living crisis has also fueled public anger over a string of corruption scandals and the government’s handling of a deadly 2023 train crash that killed 57 people. In Thessaloniki and Athens, thousands of protestors took to the streets during Mitsotakis’s speech, demanding higher salaries, better living standards, and justice for the victims of the train disaster. “For us, who have to live the rest of our lives in this pain, the least we deserve is to know what happened,” said Maria Karystianou, whose daughter died in the crash, according to Reuters. The opposition has accused the government of shirking responsibility, failing to fix critical safety gaps, and covering up evidence related to the tragedy.
Corruption allegations, including investigations into recycling and EU subsidy fraud, have further dented public trust. Analysts cited by Reuters and ekathimerini suggest that the government’s poor polling has prompted a shift to the right in an effort to win back core voters. This includes toughening Greece’s stance on migration; in July 2025, the government paused processing asylum applications from North Africa for three months to curb a surge in arrivals—a measure Mitsotakis said may be extended.
Meanwhile, the government is also grappling with delays and investigations surrounding a 1.9 billion euro ($2 billion) EU-financed subsea power cable project linking Europe to Cyprus, which Mitsotakis said would be completed, calling on Cyprus to show a clear will for progress.
Yet, even as the government touts its economic achievements and ambitious reforms, the underlying demographic crisis remains a formidable challenge. The Lancet recently warned that Greece faces a “complex array of public health challenges driven by demographic change,” with implications for the pension and health systems, labor markets, and national security. The Greek experience, the journal noted, “offers valuable lessons for other countries confronting similar pressures.”
The government has already introduced a series of incentives to encourage childbirth, including a baby bonus that has risen from 1,700 euros for a first child to 3,500 euros for a fourth, plus monthly stipends of up to 140 euros per child. But as the cost of living continues to rise and affordable housing remains out of reach for many—forcing younger Greeks to live with their parents well into their 30s—these policies have so far had limited effect. In fact, more than 700 schools were closed nationwide this month due to a lack of pupils, underscoring the urgent need for effective action.
Prime Minister Mitsotakis has ruled out a snap election before his term ends in 2027, and has even hinted at seeking a third term, according to Reuters. For now, his government is betting that the new tax relief and demographic incentives will help restore confidence and set Greece on a path toward a more sustainable future—socially, economically, and demographically.
As Greece stands at a crossroads, the coming years will reveal whether these bold reforms can truly reverse the country’s demographic decline and deliver the prosperity its citizens have long awaited.
