Greece hit by another strike over spending cuts

Greece ground to a virtual halt today as workers held yet another general strike in protest at painful spending cuts.

Public transport was halted, flights grounded and state hospitals left with emergency staff only in the latest show of discontent since the government's harsh new austerity plan was introduced last week in an effort to trim its ballooning deficit.

Under intense pressure from the European Union to quickly show fiscal improvement, the government announced an additional £4.4 billion in savings through public sector salary cuts, hiring and pension freezes and consumer tax hikes.

The cutbacks, added to a previous £10 billion austerity plan, seek to reduce the country's budget deficit from 12.7% of annual output to 8.7% this year. The long-term target is to bring overspending below the EU ceiling of 3% of GDP in 2012.

The plan sparked a wave of strikes and protests from labour unions whose reaction to the initial cuts announced earlier this year had been muted.

Today's strike, which shut all public services and schools, left ferries tied up at port and suspended all news broadcasts for the day, was the second major walkout in a week.

Hundreds of strikers gathered in central Athens for demonstrations.

The government says the cuts are its only way to dig Greece out of a crisis that has hammered the euro and alarmed international markets - grossly inflating the loan-dependent country's borrowing costs.

But unions say ordinary Greeks are being called to pay a disproportionate price for past fiscal mismanagement.

"They are trying to make workers pay the price for this crisis," said Yiannis Panagopoulos, leader of Greece's largest union, the GSEE.

"These measures will not be effective and will throw the economy into deep freeze."

Journalists, teachers, state hospital doctors and air traffic controllers are among those striking, while officers from the police, fire service and coast guard plan to join the protest rallies.

A general strike last Friday was marred by violence during a large protest march. Riot police used tear gas and baton charges against rock-throwing protesters, who smashed banks and storefronts, while left-wing protesters attacked Mr Panagopoulos as he was addressing a rally.

The unrest could spark fears that the government will have trouble in implementing its new measures and translating its projected savings into reality.

Greece insists it does not need a bailout, and its European partners are reluctant to fund one. But it has called for European and international support for its programme, warning it could otherwise go to the International Monetary Fund for help.

Yesterday deputy prime minister Theodore Pangalos said Greece could bypass the costly process of borrowing by urging international institutions to buy its bonds at a set interest rate.

Markets think some kind of rescue would be organised if default looms. Speculation has focused on possible guarantees for Greek bonds or help from state-owned banks.