NEWS

PM seeks backing for more cuts

Prime Minister George Papandreou yesterday called on Greeks to «rally together» to stop the country from «going under» shortly before the European Union’s Commissioner for Monetary Affairs Olli Rehn, in Athens on an official visit, called on the government to take additional austerity measures to plug a gaping budget deficit. During a televised Cabinet meeting, Papandreou appealed to all Greeks to back the government’s efforts to exit the crisis. «Otherwise, we risk losing the ability to determine our own fate,» Papandreou said, a clear reference to the risk of Brussels taking over Greek financial decision-making. The premier said the government already had the backing of a large section of the public. «I am touched that citizens are stopping me in the street and telling me they are ready to sacrifice a salary for the good of the country,» he said. The reference to the salary touched a nerve among unionists, angered by speculation that a new raft of austerity measures might include the abolition of the so-called 14th salary – one of two additional annual salaries paid to civil servants and employees in the private sector. The leader of the civil servants’ union, Spyros Papaspyros, said the 14th salary was a right established in history and that attempts to cut it would «provoke reactions commensurate with its significance.» The new raft of measures, expected to include a 2 percent increase to value-added tax, currently at 19 percent, a further increase in fuel tax and a new tax on luxury goods, is expected to be announced within days and certainly before Papandreou sets off for Berlin on Friday for talks with German Chancellor Angela Merkel. Merkel, who late on Sunday doused rumors of a financial rescue package for Athens, yesterday said that pushing through austerity measures would help stop market speculation that is posing a threat to the eurozone. Addressing a press conference after talks with Spanish Prime Minister Jose Luis Rodriguez Zapatero, Merkel said it was vital that «Greece really implements its announced program.» «This will be the best way of avoiding further speculation against the euro,» she said, adding that «Greece can do it.»