Belfast Telegraph

Greece accelerates austerity drive to secure vital loan deal

By Nikhil Kumar and David Elliot

Greece bowed to international lenders yesterday, accelerating its austerity drive in a bid to secure a crucial lifeline before its coffers run dry next month.

A deal between Athens and lenders from the EU, the European Central Bank and the IMF appeared to be on the cards after officials said Greece would extend a hike in property taxes, cut pensions and put some 30,000 public sector workers in a 'labour reserve' pool with reduced pay. It also plans to lower the tax free threshold on income to €5,000 as it seeks to ease its debt woes.

It's thought high-income retirees will be hard hit by the measures.

Retired people collecting more than €1,200 gross monthly pensions will see their pensions above that level cut by 20%.

The measures are expected to pave the way for the release of the funds that Greece needs to avert a potentially catastrophic default next month, with talks with officials from the troika set to resume next week. The country's powerful labour unions have pledged to oppose the cuts with fresh strikes.

Worryingly, more than 40% of young workers in Greece are already without jobs.

The dire state of Greece's financial system was highlighted by the International Monetary Fund which said the country will remain in recession for a fourth year in 2012 with unemployment creeping higher, steepening the hill the government has to climb to cover budget gaps.

Meanwhile, Greece's lenders are demanding that 100,000 civil servant jobs need to be cut, public sector salaries need to be cut and taxes must go up if the country is to secure further bailout money.

A delegation from the eurozone, the IMF and the European Central Bank unexpectedly left Athens on September 2, delaying confirmation that Greece was meeting the terms of its €110bn (£100bn) bailout agreed in May, 2010.