Greece passes controversial austerity package

Greek MPs have approved a new austerity package as it seeks to push through reforms required by the European Union and the International Monetary Fund in return for a second £110bn bail-out.

The legislation was passed by 199 votes to 74, however the coalition parties expelled more than 40 deputies for not backing the bill, which will amount to £2.8bn of cuts.

The vote, which was held under emergency procedures, partly clears the way for Greece to receive a second bail-out package and finalise a voluntary restructuring of £168bn of sovereign debt.

The new measures will see £252m in pension cuts and a 22 per cent reduction in the minimum wage to €560 a month. Thousands of public sector jobs are expected to be cut in the next three years.

Greece’s caretaker prime minister Lucas Papademos said the cuts were “the only alternative to a catastrophic default” and that failing to do so would force Greece to leave the Euro.

According to the FT, He said: “The social cost of this package is limited in comparison with the social and economic disaster that would follow if it is not adopted.”

The measures were passed as thousands protested in Athens. Buildings were set on fire amid clashes across the Greek capital, while violent protests were reported in other cities across the country.

Opponents to the package argued the austerity measures are stifling the economy and leading to soaring unemployment. Greece is currently in its fifth year of recession, while half of its young are jobless.

The passing of the deal did see markets in Asia jump overnight. In Japan, the Nikkei 225 was up 0.6 per cent, while the Hong Kong Hang Seng rose 0.5 per cent.