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Greece may have to go to polls over further cutbacks

Greece's prime minister has said he will consider holding a referendum on further cutbacks essential for the loan-dependent country to continue drawing on funds from an international bailout, amid persistent anti-austerity protests.

George Papandreou informed ministers of his plans during a marathon informal cabinet meeting yesterday that ran for more than seven hours.

Mr Papandreou has been trying to quell dissent within his own governing socialists as well as widespread anger among Greeks furious that a year's worth of painful cutbacks have failed to produce the expected results.

Thousands of people have been holding peaceful protests outside Parliament in Athens every night for nearly two weeks, and frustration increased as it became apparent that the Government has to impose yet more spending cuts and tax hikes.

In statements delivered during the meeting and released by his office, Mr Papandreou said he had called on the interior minister to set up the necessary legislative conditions that would allow such a move "when it is needed". He gave no further details.

The new plans - €6.4bn (£5.7bn) worth of remedial measures this year and a €22bn (£19.6bn) package to 2015 - are required if Greece is to continue receiving money from last year's €110bn (£98.2bn) programme of rescue loans from the International Monetary Fund and other countries that use the euro.

The Government is also pushing through an ambitious €50bn (£44.7bn) privatisation drive.

Greece looks like it will also need more money to cover a funding gap next year and prevent the country from defaulting on its debts.

Last week, debt monitors from the EU and IMF said Greece should receive the next €12bn (£10.7bn) instalment of the bailout in early July - as long as additional austerity and privatisation measures are deemed sufficient.

A final decision is to be taken by the IMF board and the eurogroup in meetings later this month.