Greece grinds to a halt in austerity protest

Greek workers have started a 24-hour strike, bringing the transport system to a standstill. The action was in protest against the government’s decision to intensify its austerity drive in order to secure more aid and save the debt-laden country from bankruptcy.

“The situation is dramatic, all major streets are jammed,” said one traffic police official, who declined to be named. A stoppage by air traffic controllers delayed 100 flights by up to four hours, and dozens more in and out of Greece were cancelled.

Tens of thousands of angry union members prepared to march to parliament in Athens as part of the first big nationwide protests since late June when daily demonstrations culminated in bloody clashes with police.

Striking taxi drivers and bus, metro and rail workers forced commuters to use their own cars, triggering kilometres-long traffic jams and stranding tourists at hotels in Athens’ ancient city centre.

Savings targets not met

After European Union and International Monetary Fund inspectors made clear they were losing patience over the government’s failure to meet the targets of a bailout, the cabinet agreed on Wednesday to front-load austerity measures.

Policymakers and economists fear a Greek default on its 340bn euro debt could set global markets tumbling and push other vulnerable euro zone members like Italy and Spain over the edge, potentially splitting the currency area.

The chairman of Goldman Sachs‘ overseas arm said the Greek situation was a major threat to the euro, while Canada said it could trigger a global banking crisis if Europe did not get it under control.

As well as cutting pensions and extending a real-estate tax rise, the cabinet put 30,000 civil servants in “labour reserve” this year, cutting their pay to 60 per cent and giving them 12 months to find new work in the state sector or lose their jobs.