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Greece slashes more jobs and spending as it vows to stay in eurozone

Athens is adamant that it will remain at the ‘core’ of the eurozone

More jobs are to be cut, more taxes raised and bigger cuts made to spending, Greece announced today in its latest effort to avoid defaulting on its debts and potentially tearing apart the eurozone.

Despite speculation that Greece would pull out of the single currency, the government in Athens was adamant that it would remain at the “core” of the eurozone.

The new cuts, unveiled after a six-and-a-half-hour cabinet meeting, risk inflaming the atmosphere at a strike by public transport sector workers due to take place on Thursday which is likely to bring the capital to a halt.

With the clock ticking on Greece to unveil tough measures to meet the demands of the “troika” of inspectors from the IMF, the EU and the ECB, the country’s embattled finance minister Evangelos Venizelos admitted a fresh round of austerity measures was unavoidable if the next tranche of cash from the €110bn (£96.5bn) bailout is to be released.

“We have to take supplementary measures … because of the recession, because of the difficult task and the weakness of the central administration have not produced the required results,” Venizelos said before the crucial cabinet meeting that eventually sanctioned even tougher austerity measures.

Greece would have “slipped off the fiscal track” without the presence of the troika, he said, as strikes were announced for next month among a workforce in which one in seven is out of work. The two biggest unions had already announced a general strike on 19 October before the government revealed the extent of the cuts that were needed to keep the bailout funds flowing.

The main changes are:

• The number of civil servants (around 750,000 in total) suspended on partial pay is to be raised to 30,000 from 20,000

• The tax threshold is to fall from €8,000 to €5,000

• Monthly pensions above €1,200 will be cut by 20%. Pensions for those below the age of 55 will be cut even more.

The government has had to push these measures through to keep Greece in the eurozone and convince the troika to release the next €8bn tranche of bailout funds by mid-October.

Elias Mossialos, a Greek government spokesman, said: “This choice sends a message to our partners and the markets that Greece both wants and is able to fulfill its commitments and remain at the core of the eurozone and the EU … It is the fundamental and strategic choice of the country to return to fiscal independence as an equal member of the eurozone, achieving a primary surplus as soon as possible,” he said.

The measures come on top of a new property tax that will be paid through electricity bills. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds