Greek public finances likely worsening

Additional austerity measures would run the risk of deepening the Greece recession even further and eventually be inefficient in improving the fiscal position of the country.

The move back into deep recession is likely to have a sizeable effect on the fiscal situation of the country. From a primary surplus worth 0.4% of GDP in 2014, a primary surplus has been achieved over H1 2015 only due to the underperformance of primary expenditures and additional EU structural funds. 

Furthermore, the Greek government has started to build up arrears. Therefore, Greek public finances are likely much worse now than envisaged only a couple of months ago. 

"Achieving a 1% of GDP primary surplus this year will likely be extremely challenging and is likely to require additional measures, which are going to be difficult to accept by Syriza MPs and by Greek citizens", says Barclays.