Against a background of a spiralling budget deficit and a tumbling credit rating, Greece’s parliament has passed a new austerity budget designed to bring the economy back from the brink.
The aim is to shrink public debt to 9.1 percent of overall economic output next year, down from 12.7 percent this year. It means deep cuts in public spending.
Greek Prime Minister George Papandreou addressed parliament:
“It’s not enough just to solve the symptoms of our problems with quick painkillers or temporary policies. These could impress in the short term, but they will not be the deep changes needed for the survival of our economy.”
Approval went strictly along party lines. The newly elected socialist Pasok party has 160 of the 300 seat house.
The European Cental bank is looking on with concern. If the plan does not work it could be forced to bail out the country which would dent confidence in the value of the euro.
But there is stiff opposition in the country. Workers in the public sector have already announced a 24-hour strike in February against proposed wage and pension reforms.
And then there is Greece’s youth. It is already stirred up over police treatment, and a planned 10 percent cut in social security spending will badly hit those out of work.