Greek MPs vote through cuts laws

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Greece has staved off bankruptcy for now by voting through laws to enact an austerity package of tax rises, pay cuts and 150,000 public sector redundancies.

The move angered demonstrators, who continued street battles with police and signalled long-term protests against the imposition of financial strictures they say are unfair and do not address the root cause of the country's deep economic crisis.

Today's vote by MPs in Athens, following yesterday's narrow approval of more austerity designed to raise £25 billion by 2015 to offset the Greek deficit, secures another slice of EU bail-out money to pay off immediate Greek debts of 4 billion euros (£3.6 billion) by a deadline of July 15.

But the vote on law changes to enact the new austerity package does not mean the medicine will work: the scale of the public backlash so far has raised fears of widespread public defiance which could yet scupper Greek government hopes of pulling itself out of a growing economic crisis.

The austerity deal was a condition for receiving the next £10.7 billion instalment of a £96.5 billion Greek bail-out programme from the EU and the IMF.

Today's agreement on the necessary law changes to impose the austerity package means eurozone finance ministers should clear the latest bail-out payment at talks in Brussels on Sunday.

Another meeting on July 11 will then consider giving Greece a second massive bail-out worth more than £100 billion later this year.

The two Greek parliamentary votes, in which the centre-right opposition fell in with the government to avert imminent bankruptcy, drew praise from EU leaders for pulling the country back from the brink.

Markets rallied as a result, but the fear of a Greek default still looms as the country struggles to slash its massive deficit in the face of a public revolt.

That would risk contagion across the eurozone, with the single currency still exposed to market volatility.

But the alternative was a Greek default in mid-July, making it harder for other struggling eurozone countries - Ireland and Portugal - to raise finance.

Today the European Trade Union Confederation (ETUC) warned that the austerity package "forced" on Greece by the EU and IMF would not bring the country back to economic recovery.

An ETUC statement said: "If not handled with the necessary vision, the situation could degenerate into an economic and social catastrophe, not only for Greece but for the EU as a whole.

"The people and workers of Greece are being made to pay for the mismanagement of politicians and speculators - in particular, the previous government and the banks that advised them while betting on their failure. Popular unrest is deep."

The ETUC said another course of action was needed.

It said: "The road to recovery must come from an EU solidarity pact, with the active involvement of trade unions in Greece over the use of the funding made available, and a medium and long-term investment programme for the creation of jobs and capable of bringing the country back to a sustainable economic development.

"Trade unions must be involved at all levels in drawing up plans for growth and innovation, as well as for debt reduction."