Greek PM vows to cut deficit amid protest

Greek Prime Minister George Papandreou has vowed to "take any necessary measures" to reduce the country's deficit, saying his government's "stability program will be implemented in every measure."

His comments came as a strike by civil servants grounded all airline flights and shut down public services across Greece on Wednesday, in the first major challenge by labour unions to the austerity measures.

Air traffic controllers, customs and tax officials, hospital doctors and school teachers walked off the job for 24 hours to protest government spending cuts and tax reforms meant to overcome a budget shortfall revealed last year.

Papandreou was speaking in Paris after a meeting with French President Nicolas Sarkozy. European Union leaders are to discuss Greece's economic woes during a summit Thursday in Brussels. The EU is pressing Greece to balance its books out of concern for the effect the country's shaky economy is having on the euro and financial markets.

Greece is trying to reduce a budget deficit equal to almost 13 per cent of its total 2009 economic output.

Papandreou has already faced down a three-week protest that ended Tuesday by farmers demanding higher subsidy payments.

Airports, hospitals struck

The umbrella GSEE union, the country's largest labour organization, organized Wednesday's protest. The walkout halted airline flights in Greece at midnight. State schools and tax offices closed and state-run hospitals were running on emergency staff. Protests were scheduled for central Athens and the northern city of Thessaloniki.

The government has announced spending cuts worth $2.74 billion US, but shied away from further salary reductions or layoffs in a civil service that employs 750,000 people, all with guaranteed lifetime jobs.

It announced a two-year increase in the average retirement age, taking it to 63 by 2015.

The austerity measures also added 0.14 euro (20 cents) in taxes to a litre of regular unleaded gasoline, and imposed a requirement that all Greek businesses — including vendors at farmers markets and cab drivers — issue receipts.