Greece must wait for EU bailout despite fury over austerity cuts

Angry demonstrations have rocked the capital Athens since politicians approved austerity measures, including slashing the minimum wage by more than a fifth and axeing one in five civil service jobs.

But the European Union said yesterday that, although the move was a “crucial step forward”, it would still take some time before the second bailout is delivered.

Final approval for the new aid payments will not be granted by Germany’s finance ministry until early March, and only after the merits of Greece’s debt relief deal with private bond holders become clearer.

Eurozone ministers will meet this week to decide whether Greek politicians have done enough to qualify for the EU and IMF-backed bailout, which the country needs to avoid going bust in mid-March.

Bankruptcy could push Greece out of the euro, plunging other countries in the single currency union into greater turmoil.

EU Economics Commissioner Oli Rehn welcomed the austerity measures, but challenged the Greek government to “sell” the package to the public and end the country’s “spiral of unsustainable finances”.

Mr Rehn, speaking in Brussels, stopped short of confirming that the bailout was a certainty. He said other conditions would need to be met before the deal could go through.

“Yesterday’s vote was a ‘crucial step’ towards adoption of the (bailout) programme,” said Mr Rehn. “I am confident that the other conditions, including the identification of concrete measures of 325m euro (£270m) will be completed by the next meeting of the eurogroup, which will then decide on the adoption of the programme.”

The commissioner said the Greek vote had been “an expression of the determination prevailing in the country to put an end to the spiral of unsustainable public finances and to the loss of competitiveness”.

He added: “In the last weeks, there have been tensions both in Greece and within its partners. The correction of the serious imbalances affecting the Greek economy, and the restoration of the conditions for growth and jobs, are a long-term endeavour.”

The delay in approving the bailout underlines the distrust that has built up against Greece, where promised cuts and reforms have been agreed in parliament over the past two years but never properly implemented.

Mr Rehn said the EU would stand by the Greek people, but the country’s authorities had to “take full ownership and make the case (for the bailout) and then fully implement it”.

“In any case,” he added, “Greece should have implemented most measures to balance its economy and boost sustainable growth and employment many years ago, even in the absence of such a (bailout) programme, as the country has systematically lived beyond its means for a decade.”

At least 45 buildings in Athens were burned after Greek MPs approved the budget cuts on Sunday, but the vote has helped raise hope elsewhere that the worst of the global economic crisis may be over.

The latest survey by the Organisation for Economic Co-operation and Development (OECD) found a positive change in momentum across all its member countries, driven by the US and Japan.

The OECD’s main indicator for the UK suggests activity picked up and the economy can avoid recession, although the country’s borrowing cost rose slightly.