The 1970s found the Greek society moving in the maelstrom of the colonels’ dictatorship, who tried to disguise the oppressive regime that they had imposed through strongly expansionist economic policies (creation of high growth rates). A characteristic of that period was the generous funding of various economic activities, in order to secure usually foreign investments. At the same time, the adoption of a corrupt dominating pattern of economic relations (without giving any emphasis on competition and productivity) created explosive inflationary pressures during the first years of the 1970s.

The international oil crisis of 1973 led to a general increase of goods and a two-figure inflation, which would constitute an inherent phenomenon in Greek economy for decades. High recession affected sectors of activity, such as building and construction, while emigrant and foreign travel exchange had been temporarily reduced along with public investments. Enormous expenses on heavy military equipment meant that reforms in state infrastructure (e.g. education, health) would be of a secondary importance. Conditions in employment would not develop normally during the second half of the decade with unemployment rising, strike mobilizations intensifying etc.

With the international crisis of 1979 and the ensuing recession, inflation soared once more. In 1981, year of change in the political scene, the country was in a state of stagflation, reduction of the real income of employees and large budget deficits. The large number of private enterprises that had passed to the control of the state, ‘the problematic’ enterprises as they were called, undermined any perspective of economic improvement and growth, while debts from foreign loans cancelled any form of financial planning.