Greek Government Approves New Spending Cuts

PM George Papandreou has likened the budget crisis to a "wartime situation". Photo by BGNES

The Greek government has approved a new package of tax rises and spending cuts to save EUR 4,8 B and ease its budget crisis.

The measures include a rise in taxes on alcohol and tobacco, as well as a 30% cut in holiday bonuses paid to civil servants, the BBC reported.

The EU had called for austerity measures amid fears that Greece's problems could undermine the eurozone.

PM George Papandreou has likened the budget crisis to a "wartime situation".

He told reporters: "These decisions are necessary for the survival of the country and the economy, so that Greece can exit the vortex of speculators and defamation, so that we can breathe and keep on fighting."

There have already been strikes by trades unions in protest against the government's cost-cutting plans.