The battle to prevent Greece lurching into disorderly default continues as lawmakers returned to the Athens Parliament on Thursday to approve the next stage in the hugely unpopular austerity package.

Having approved the programme of fresh taxes and cutbacks in principle on Wednesday, Greek MPs will vote on an enabling bill giving the government authority to implement the new measures speedily. Analysts are broadly confident that the legislation will pass but are still unconvinced that George Papandreou’s administration can actually implement the tough measures in the face of deep public hostility.

“If we wanted to be cynical, or realistic, we could say that the disaster scenario has been averted for now but we may well be revisiting in three or six months,” predicted Gary Jenkins of Evolution Securities in a research note yesterday morning.

Mr. Jenkins fears Greece will fail to make enough progress to placate its European neighbours and the International Monetary Fund (IMF), upon which it relies for its funding.

The financial markets were broadly calm yesterday, following strong gains on Wednesday. The FTSE 100 index in London opened 22 points higher at 5878, after Asian markets recorded gains. The euro gained around 0.7 cents against the U.S .dollar, to $1.4505.

European leaders have hailed Wednesday’s vote, by 155 votes to 138, as a key moment in the debt crisis that has gripped the region for many months.

“The country has taken an important step forward along the necessary path of fiscal consolidation and growth—enhancing structural reform. But it has also taken a vital step back from the very grave scenario of default. This was a vote of national responsibility,” said Herman Van Rompuy, president of the European Council, and European commission president Jose Manuel Barroso in a joint statement.

Attention may now shift to Italy, where the Italian cabinet met yesterday to approve its own austerity budget.

©Guardian News & Media 2011

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