Greek parliament narrowly approves €13.5bn austerity package after mass protests - as it happened

It's time to stop today's live blog before we crash into tomorrow here in London.

And what an exciting day it's been, with the Greek parliament narrowly approving the country's €13.5bn austerity package after a tense vote, a long debate, and occasional moments of farce in the Athens assembly.

The vote took place after tens of thousands of people took to the streets of the Greek capital to protest about the package. Initially peaceful, the protests were marred by violent scenes and clashes between riot police and a small group of protesters.

The ongoing eurozone crisis helped to send shares falling sharply in the financial markets, with the Dow Jones tumbling by 312 points.

There were plenty of reasons to be gloomy -- the EC slashed its growth forecasts, German and Spanish industrial production data miss forecasts, and Mario Draghi warning that the European economy was in poor shape.

Thanks for reading and commenting, as ever....

...and I'm particularly grateful to those people in Athens who we've been quoting and referencing over the last couple of days.

Good night!

One last thing to flag up -- I mentioned at 5.54pm that there was a report that a small number of protesters tried to "storm the parliament" in Athens by breaking through the barriers outside.

Joanna Kakissis, a reporter in Athens, tells me that she was outside the parliament and there was no attempt to storm it.

Theodora Oikonomides says some protesters may have "sought to go over the crowd control barriers", but that this not a mass charge on the parliament.

Hope that helps clarify the situation.

Just before we go, here are a few photos showing the action in the Greek parliament during the climax of tonight's vote:

View image in fullscreen

View image in fullscreen

Although it's 1am in Greece, some people still have the energy to comment on the narrow austerity vote. Here's a round-up:

And here's some reaction from the UK too:

Greek newspaper Kathimerini has a good write-up of the debate in the Athens parliament before tonight's vote: Greek Parliament passes new austerity package with tiny majority

It points out that tonight's expulsions (see 10.26 GMT) means that the socialist Pasok party now only has 27 MPs -- down from 160 three years ago when it governed alone.

Prime minister Antonis Samaras says the next challenge is Sunday night's vote on the budget, after tonight's austerity vote.

Efthimia Efthimiou and Yannis Koutsomitis have the quotes:

Greece's finance minister, Yannis Stournaras, was not getting carried away by tonight's narrow win.

Speaking shortly after the vote was over, Stournaras said:

The difficult part is starting now.

The Greek parliament has now gone into recess until Thursday night.

That's when debate will begin about the 2013 budget, with a vote scheduled for Sunday night.

Our Athens correspondent Helena Smith confirms that Antonis Samaras's government secured 153 votes in favour of the austerity package.

A total of 128 votes were cast against the proposal.

The remainder of MPs abstained -- with 18 voting 'present' and one going absent.

Already the political recriminations have started - with SEVEN government MPs being kicked out for failing to support the €13.5bn package of cuts.

Six of the rebels were from the socialist Pasok party.

Athens journalist Efthimia Efthimiou has the details:

Greek officials are still counting the votes, but it looks as if a total of 153 votes were cast in favour of the austerity package.

The Greek Government has just secured 151 votes -- the austerity bill WILL pass!

More to follow....

Two more Pasok MPs have failed to toe the party line -- Thodoros Parastatidis and Angela Gerekou.

There will be repercussions....

Here's the latest voting tally:

100 MPs have voted yes, while 92 have voted no.

First to 151 wins.

Another rebellion: Yiannis Koutsoukos of PASOK has abstained rather than voting for the measures:

The vote is rattling along, and Nick Malkoutzis, the deputy editor of Kathimineri, is helpfuly tweeting highlights:

We have a defection! Of sorts.

A member of Democratic Left has defied instructions to abstain in tonight's vote -- and has instead voted against the austerity package.

That might be significant, if the vote is very, very tight.

It's a roll-call vote, which means each MPs name is, well, called out and they say whether they support or reject the memorandum.

There has been applause each time an MP has voted No.

A reminder - there are 300 MPs in the Athens parliament, so Antonis Samaras needs to secure 151 votes in favour of the austerity programme (known as the Third Memorandum).

Democratic Left (the smaller coalition partner) has already vowed to abstain, so Samaras ought to have a majority of 154-157... But we'll see just how many MPs defy their leaders and oppose the package.

Voting has begun in the Greek parliament, on the €13.5bn austerity package that was agreed between the Athens government and the Troika.

As Greek protesters return home damp, cold and with a lingering smell of tear gas, there is particular anger that the riot police used water cannon today.

This is said to be the first such incident in years (I remember that the unit was deployed on the streets for Angela Merkel's visit to Athens in October, but was not used).

Here's another photo of it in action:

Here's a view of the inside of the Greek parliament this evening (during Antonis Samaras's speech, I reckon).

View image in fullscreen

The final speech of the evening has begun in the Athens parliament - it's labour minister Yiannis Vroutsis.

He starts by telling MPs that Greece needs to stick to reality rather than dreaming about how things could be.

An update on this evenings protests in Athens -- the latest reports say that 103 people were detained* and five arrested, and with seven police injured. No update on the number of members of the public hurt (we heard five earlier tonight)

* being 'detained' means a trip to the police station for questioning, rather than being charged with an offense.

Confirmation that the crucial vote on Greece's austerity package is imminent - it's now due to start in 20 minutes time

As we wrote at 7.38pm, the government is expected to only manage a narrow majority - especially if there are more defections from the Pasok party.

And as Sky News's Alistair Bunkall points out -- tonight's vote is just one hurdle

Over in New York, the Dow Jones industrial average ended today's trading session 312 points lower at 12932, a fall of 2.36%.

That's the lowest closing level for the Dow since early August, Doesn't suggest Wall Street is delirious with joy over Barack Obama's triumph at the polls....

Here's a selection of photos from this evening's debate in Athens (see 6.40pm onwards for highlights of the speeches)

View image in fullscreen

View image in fullscreen

View image in fullscreen

View image in fullscreen

UPDATED: And the latest word from Athens is that the crucial vote on the €13.5bn austerity package will come after 9.45pm GMT, or 11.45pm Greek time.

So not too much longer to wait....

Back to Greece... where the debate ahead of the austerity vote is continuing.

Panos Kammenos, head of the right-wing Independent Greeks, is speaking now. He accused the government of driving the country deeper into recession, and added that it could go bankrupt "within a few months".

View image in fullscreen

Angela Merkel and David Cameron held a press conference in London this evening, before their joint meeting (see 7.52pm for footage of the chancellor's arrival).

Merkel struck a conciliatory tone over the row over the EU budget saying:

Despite differences that we have it is very important for me that the UK and Germany work together....

We always have to do something that will stand up to public opinion back home. Not all of the expenditure that has been earmarked has been used with great efficiency ... We need to address that.

A week ago, Cameron found himself on the wrong end of a backbench rebellion over the EU budget, with MPs voting in favour of a real-terms cut in the EU budget. That's not what Merkel wants, and even harder to achieve than Cameron's goal of pegging any increase to inflation.

Here's another photo of the leaders chatting tonight.

View image in fullscreen

Greek journalist Makis Sinodinos reports that around 70 people have been detained today, two were arrested, and five citizens were wounded.

Seperately, Skai News reported earlier this evening that five policemen have been injured in the clashes.

Next up, Evangelos Venizelos of Pasok (a junior member of the coalition government).

Fresh from urging his own MPs to not defect, the soclalist leader began by blasting his fellow left-winger, Alexis Tsipras.

Venizelos said that while Tsipras claims to be a "progressive", he is actually trying to cling onto the past. He then claimed Syriza was "investing in the death of this country", in the hope of seizing power from the ashes of Greece.

And Venizelos also defended the €13.5bn package of tax rises, spending cuts, labour reforms and other austerity - saying Athens has 'no choice' but to comply.

Alexis Tsipras continued to throw verbal punches at prime minister Antonis Samaras in the Athens chamber:

The Syriza leader said Samaras's privatisation programme was a flop,. and said it was crazy to front-load so much of the austerity programme (with around 70% of the total plan landing in 2013).

He then argued that his policy (of rejecting the Troika's demands and negotiating a new deal) was a matter of life and death:

Tsipras ended his speech by calling for new elections. Not for the first time...

...and not impressing some observers either:

Meanwhile in the UK, Angela Merkel has arrived at Downing Street for talks with Prime minister David Cameron over the crisis.

ITN has the video footage:

Given the two leaders are divided over the issue of the EU budget, it could be a difficult evening - as ITN's deputy political editor Chris Ship explains:

Alexis Tsipras, the head of the Syriza opposition party, is now speaking in parliament - and lambasting Antonis Samaras for his handling of the crisis (or at least, he was until Samaras nipped out of the chamber)

Tsipras told MPs that the government was brazenly bringing in an unconstitutional law " knowing that it will be overturned by the courts", and also said it was wrong to use Greece "as collateral" for its lenders.

Tsipras went on to blast the government over the infamous list of alleged tax evaders:

Midway through Tsipras's address, Samaras left the room , prompting the Syriza leader to joke to MPs that the PM cannot take criticism.

Samaras then returned, and responded that he would seek Tsipras's permission before taking another phone call on "national issues".

What larks.

Tsipras also argued that Greece need not fear exit from the eurozone (as Samaras suggested earlier), as Europe needs Greece as much as Greece needs Europe....

It appears that the rain and the teargas in Athens has combined to drive many of the protesters out of Syntagma Square.

As Helena Smith writes:

Not since the passage of the second EU-IMF sponsored bailout agreement back in February can I remember such liberal use of tear gas by police forces defending the parliament building. Although the rains have returned, the skyline above Athens is now thick with an acrid cloud of toxic fumes.

In another development tonight, Mega TV is reporting that Socialist Pasok leader Evangelos Venizelos is holding back-to-back meetings with party cadres in a bid to stem dissent over the measures whoich is now threatening to tear his party apart. Hours after top level Pasok cadre Michalis Chyrsohoidis insisted that 28 MPs would back the package (see 5.11pm), speculation is growing that more will join the ranks of defectors.

Helena adds:

"We are looking at as many as seven Pasok MPs who are now seriously considering not backing the bill," said Mega TV's parliamentary reporter. "If that is the case the measures will be approved by 153 deputies out of the 160 seats controlled by Pasok and New Democracy," he said referring to the two governing parties that have pledged to back the legislation. The weaker the majority the greater the risk for the government which while surviving the vote may not be strong enough to survive the social backlash the measures are likely to unleash.

View image in fullscreen

Greece prime minister Antonis Samaras is giving a rousing speech in the Athens parliament, telling MPs that the package of austerity measures on the table tonight is definitely the last (Helena Smith flags up)

But while the PM was speaking, riot police continued to fire tear gas outside parliament as the number of demonstrators dwindled.

Samaras told the 300-seat House that:

A lot of these measures are structural reforms that should have been taken years ago and others - like pension and pay - cuts are unfair but all are part of a compromise that we now have to make.

The conservative leader also told MPs that they had the chance to "seal Greece's new credibility", and that their vote tonight would determine whether Greece remains in the eurozone or "retreat into isolation".

He also said:

Samaras will give a second speech later, after opposition leader Alexis Tsipras has spoken.

Via our picture desk, here are some photos from within the heart of the clashes this evening:

View image in fullscreen

View image in fullscreen

View image in fullscreen

It's a depressing contrast with the scenes before the violence began, when hordes of people were making their point peacefully.

For example, here's a shot of opposition MPs from Syriza appearing outside parliament:

View image in fullscreen

Back inside the parliament, finance minister Yannis Stournaras has defended the €13.5bn austerity package which MPs must vote on tonight.

In the face for calls for his resignation (see 6.14pm), Stournaras insisted that Greece had no choice but to swallow yet more austerity.

It's a familiar tale -- and one which the fantastic Diane Shugart tweeted. Here are some highlights:

Stournaras went on to argue that Greece could build a modernised, more efficient economy, on the back of its mineral resources and tourist sector -- assets which other countries can only envy, he argued.

He continued:

And in conclusion, Greece's finance minister urged MPs to set aside their concerns and support the austerity bill, to guarantee the "hope, prospects, and the continuity" of Greece.

Reports of fresh clashes between police and demonstrators:

Russia Today is also streaming live footage from Athens - here.

Their feed shows crowds of people moving around the centre of Athens, and other places where people are remaining in situ.

There are also places where riot police are in nervy standoffs with protesters. It appears that the demonstrators are being corralled in certain parts of Syntagma Square (if they decline to leave)

Occasional explosions can also be heard (i couldn't say whether they are petrol bombs or stun grenades, or something else)

Here's a screengrab:

Janine Louloudi, a freelance journalist, is also in Athens and reports that teargas is being liberally deployed.

The disruption outside the Greek parliament was matched by chaotic scenes inside the chamber, with finance minister Yannis Stournaras facing calls for his resignation.

The row began this afternoon when parliamentary staff realised that the austerity bill included an amendment to harmonise their salaries with other civil service workers - and effectively cut their pay.

They responded by declaring a strike, throwing the parliament into confusion. A recess was called, amid fears that tonight's debate and voce could not continue without any note-takers.

In the end, Stournaras pledged to withdraw the motion, staff returned, and the debate resumed. However he still vows to introduce the measure soon, and has been told to quit by furious opposition MPs.

A reminder that you can watch the action in Syntagma Square in this live feed, embedded here:

Loud blasts can also be heard over Athens as police also use stun guns in a bid to control the crowds, reports our correspondent Helena Smith

She writes:

The sound of tear gas canisters being fired by riot police has been exacerbated by the piercing blast of stun guns fired by riot police both in Syntagma and around its side-streets. As police helicopters circle overhead, a steady stream of protestors appear to be leaving the square and making their way into the ancient Plaka district. As I write, many are walking down Adrianou street one of the district's main arteries.

"We've made our point. We went and protested. Now those hoodlums have taken over and its getting scary we've decided to go home," saidMaria Koskosi, a middle aged research scientist.

"You can't even protest peacefully in Athens anymore."

Other protesters, though, are sitting tight.

Reuters reports that the violence at Syntagma Square was prompted by small number of protesters who attempted to storm the parliament.

Here's their story: Violence erupts at Greek protest, parliament interrupted

More photos from a wet, tear-gas soaked Athens:

The situation in Athens has deteriorated in the last few minutes, with molotov cocktails being thrown at police and tear gas being used

This photo (taken from the Zougla live TV feed) shows an explosion close to riot officers.

People at the scene also report that the crowds booed and shouted at the people throwing the petrol bombs (typically, a small minority of rioters cause this kind of disruption in Greece).

There are also reports that water cannon is now being used on the crowds, and that tear gas has been deployed.

Greek police spokesnan Lt Col Christos Manouras has just told our Helena Smith that he thinks "80,000" protestors have converged on Syntagma Square - those unionists might just get their magic turnout tonight.

Despite the protests on the streets, deputies in the socialist Pasok party reckon the austerity bill will pass tonight, despite a backbench rebellion over the measures.

One MP told our own Helena Smith that the bill will get be approved, if only by a whisker. She writes:

“It will definitely be voted through,” said Michalis Chrysohoidis, the former minister and high-profile Pasok cadre. “Out of [the party’s] 33 MP’s, 28 will endorse the bill. Five are still staunchly resistant but overall I see it being voted through with about 155 votes,” he added referring to the fact that the government’s other junior partner, the Democratic Left, will definitely abstain.

“I am very optimistic. Once this and the budget are ratified on Sunday things will be much easier for our country.”

Alexis Tsipras, the radical leftist main opposition leader, implored lawmakers not to support the bill saying: "[your] responsibility to the country and the people is above ephemeral party discipline. We ask you not to vote the measures and the budget."

This might be the best photo of Athens yet tonight (hat-tip Theodora Oikonomides)

It's now raining in Syntagma Square, but the demonstrators aren't leaving. Instead, they are chanting slogans such as:

Here came the rain, here came the storm, here came the government's end.

That's via university lecturer Spyros Gkelis (who tweets as @northaura ), and also reports:

Unionists have told our correspondent in Greece, Helena Smith, that as many as 200,000 could attend today’s protest against the new package of austerity measures that MPs also say will almost certainly pass.

From the streets of the capital, Helena reports:

With the angry chants of furious workers wafting through central Athens, unionists are forecasting a healthy turn-out of protestors ahead of the vote. Although organizers of today’s mass rally are keen to point out that transport links will play a role (after Tuesday’s damp squib of a demonstration) the bet is on large numbers showing up in Syntagma.

“There could be as many as 200,000. It’s unpredictable, everything will depend on the ability of people to come in,” Ilias Iliopoulos, general secretary of ADEDY, the union representing civil servants told me as militants aligned with the communist party workforce, Pame, began gathering with mathematical precision in Omonia square at 5pm local time.

“There is still time to stop these measures. There is still an alternative solution to measures that are totally counter-productive and unfair.”

With the proposed budget cuts widely seen as the tipping point for many Greeks brought to their knees by five successive rounds of tax increases and wage and pension cuts, it will be interesting to see how many middle class Greeks turn out for the rally, analysts say.

World stock markets have fallen sharply this afternoon, led by a worrying slide in New York as Wall Street traders react to Obama's victory by selling heavily.

The Dow Jones industrial average has now tumbled 345 points, or 2.6%, at 12,900.

The sale and speed of the rout has surprised traders. The looming US fiscal cliff, the crisis in Europe, and the weak state of the global economy have all been blamed.

David Madden, market analyst at IG, said traders were being dogged by fears over the eurozone.:

Barack Obama is back by popular demand, but traders are now more interested in Athens than America as stocks slide ahead of the Greek austerity vote.

The European Commission got the ball rolling by cutting next year's growth forecast for the region; poor German industrial production numbers then dragged stocks into the red; before jitters surrounding the Athens austerity vote means we are now well and truly offside....

The big worry is, will the Greek coalition pass the austerity package through parliament? Reports suggest it will get through with a slim majority but investors fear the worst, although I doubt it will be blocked because the bailout is essential to Greece's survival. The negative sentiment in Europe has soured the sweet taste of Obama’s victory.

Here are the closing prices:

FTSE 100: down 93 points at 5791, - 1.58%

German DAX: down 2%

French CAC: down 2.5%

Spanish IBEX: down 2%

Italian FTSE MIB: down 2.5%

Here's a short video clip shot in Syntagma Square a little while ago

Estimates for the number of people assembled outside the Athens parliament and the surrounding area range from 60,000 to 100,000.

There have also been reports that the police are 'controlling' the situation by restricting access to many roads in Athens.

Here's a selection of the best photos from protesters in Syntagma this evening, via Twitter:

(PAME are the communist union, of course)

And on a lighter note:

Tens of thousands of people are now assembled outside the Athens parliament, lighting up Syntagma Square with lights and carrying banners protesting against the €13.5bn austerity package that will be voted on in a few hours.

Here's a photo from the live feed (at 3.08pm )

People on the ground report that the situation is still pretty calm, despite the large crowds.

Here's what some of our favourite Greek tweeters are saying:

Speaking of the Athens parliament, the Syriza opposition party have written in to explain why they forced a 'roll-call' vote at the start of today's debate on the austerity package (see 10.57am for my attempt to report what happened)

Nikolaos Chountis MP, said the government had "violated any democratic notion" by giving MPs barely a day to study a detailed 300-page report. In addition, changes to pension rights of journalists and engineers have been included even though they were rejected by MPs last week (he said).

Chountis added:

It is obvious that this coalition government has lost any sense of obligation to follow people's will and interests a long time ago but, the last days, they have broke even the last limits of appearing to follow the basic democratic rules.

And it is so more important if we take into consideration the nature of the measures that they are adopting, measures that not only will aggravate the austerity and the recession but will permit to give away all the public services, all the institutions of common good, the land, the water and the resources of the State taking away any social, labour and environmental rights.

Our picture desk have provided new photos from the Athens parliament, mostly of finance minister Yannis Stournaras (who looks in quite decent health, following his collapse last month with flu and exhaustion).

Here's a couple:

View image in fullscreen

View image in fullscreen

Here's a great quote from Angela Merkel's speech in Brussels, via regular commentator Yannis Koutsomitis:

But is the European experiment one of fusion, or fission?....

As James Wilkins of Thessaloniki points out, the chancellor didn't appear to mention Greece at all...

Angela Merkel has told the European Parliament that Europe should not "shy away" from a treaty change, it it would help calm the crisis.

During her speech (see 2.54 for live feed), the German chancellor also insisted the national governments must surrender some sovereignty in return for a stronger eurozone, through "enforced common financial and economic policies".

Merkel also repeated that she won't be rushed on creating a fully-armed banking union, saying speed must come second to quality.

Another highlight - Merkel just said that she hopes to avoid a two-speed Europe.

Nice aspiration, but recent development suggest the EU is heading for a 'three-speed' set-up (eurozone members embracing closer fiscal union; countries who might join the euro in future, and Britain, leaning on the emergency exit).

Here's some more highlights:

And here's a photo of Merkel taking questions:

A reminder for anyone new:

You can watch live coverage from Greece at Zougla TV

Or the USTREAM page (embedded below) is also highly recommended (just click to watch)

It's just gone 5pm in Greece, and that means the protests against the austerity programme are officially underway.

There are now several hundred people gathered outside the Greek parliament in Syntagma Square, as this snap shows:

View image in fullscreen

Heads-up: Angela Merkel is about to give a speech to the European Parliament.

You can watch it live, in the box below

After the speech, Merkel will head to London to meet David Cameron for talks about the EU budget (among other issues)

On Wall Street, investors have marked Barack Obama's re-election with a sudden burst of selling at the opening bell.

That sent the Dow Jones index tumbling more than 200 points in the first few minutes of trading.

Partly a reaction to the result, but partly also a recognition of the challenges facing the president (such as the fiscal cliff, another fight over the debt ceiling, and the problems across the world economy).

Dr. Mohamed A. El-Erian, chief executive of bond trading giant Pimco, also pointed to the situation in Greece today...and Mario Draghi's speech in Germany (see 1.15pm for details)

Over in Athens, municipal workers have occupied the Administrative Reform ministry in the Greek capital - leading to passionate confrontations with riot police.

The occupation is part of the protests against the austerity package that will be voted on tonight. Here are some photos from the scene:

View image in fullscreen

View image in fullscreen

One of our regular contacts in Greece, Theodora Oikonomides, reports that at least one hundred people are now assembled close to the parliament building. Plenty of police in place now, too.

Back to the EC's new, gloomier forecasts (see 12.32pm). My colleague @nickvanmead has created a nifty interactive map that shows the GDP, deficit, unemployment and inflation projections over the next three years.

It's here: Eurozone slashes growth forecasts

And here's what it looks like:

Our economics editor, Larry Elliott, has analysted the forecasts too, writing:

The eurozone will struggle to emerge from a double-dip recession next year as deep budget cuts stifle growth, the European commission has said.

In a gloomy health check on the state of the 17 countries that belong to the monetary union, Brussels said a sharper than expected fall in output in 2012 would be followed by a virtually non-existent recovery in 2013.

The EC also warned that the UK risks missing its own fiscal adjustment targets, although Olli Rehn suggested it was too early to be certain that Britain was careering off course (there's a good write-up of the UK forecasts in the Daily Telegraph's own live blog).

And Nick Spiro, bond expert at Spiro Sovereign Strategy, said the EC's reports were deeply worrying:

The title of the opening chapter of the European Commission's 2012 autumn economic forecasts - "Sailing through rough waters" - is a masterpiece of understatement. 

Even a cursory glance at the bleak data for the countries in the single currency area shows that many economies' boats have long since capsized or are in danger of submerging.

The full report is now online (not for the squeamish).

Charles Dallara, head of the Institute of International Finance (and the man who represented Greece's private creditors in this year's €130bn debt swap deal), is heading back to Athens next week.

The IIF just announced that Dallara will visit Athens on 13 and 14 November:

where he will exchange views with senior government officials
and private sector leaders regarding Greece and the Euro Area.

Interesting timing, given the uncertainty over Greece's financial programme.

Dallara will also give a speech called “Adjusting Course: a Strategy for Europe and Greece to Emerge from the Crisis”, at noon on November 14.

Could be a good listen. Dallara has criticised Europe's pursuit of austerity several times recently. Having taken a 70% loss on their Greek loans already, Greece's private creditors are in no mood to lose the rest.

View image in fullscreen

And here's a new photo from Syntagma Square which shows just how quiet things are right now....

Back to Greece. With just under two hours to go before today's mass protest rallies in Athens, police units have moved into Syntagma square reports our correspondent Helena Smith.

She writes:

It's hard to believe that Syntagma Square, Europe's protest plaza par excellence, will soon be the staging ground for what unions are calling one of the biggest anti-austerity demonstrations ever. For now the square resembles a sleepy southern European meeting ground with the exception of the shuttered shops, banks and hotels that border it.

Police presence until now has been almost non-existent although riot vans with armoured squads have just moved in and are beginning to cut off access to the parliament building on Vasillis Sofias avenue.

One police officer said "reinforcement" of the square would be a priority with the police presence doubling that of yesterday when an estimated 40,000 protestors took to the streets.

Here's a photo showing how quiet the streets of Athens were this morning:

View image in fullscreen

View image in fullscreen

Mario Draghi, president of the ECB, has delivered a clear warning to Germany that it is being threatened by the eurozone crisis and will benefit from a lasting solution.

Giving a speech in Frankfurt today, Draghi said that the eurozone was in a pretty dire situation, and pointed to recent data showing Germany's small firms were suffering.

Unemployment is deplorably high. Overall economic activity is weak and it is expected to remain weak in the near term. And the growth of money and credit are subdued.

Draghi also tried to explain why it was very much in Germany's interest to resolve the crisis:

It is the weak euro area economy that is keeping interest rates here at very low levels. And it is the crisis of confidence in some euro area countries that is causing safe-haven flows of money into Germany, depressing interest rates even further.

This highlights the fact that countries in a single currency area are connected like communicating vessels. A change in one vessel creates an equal change in all the others.

He then cited the steady increase in Germany's claims on TARGET2 (the system used to handle liabilities between central banks across the eurozone):

As interest rates rise in countries in difficulty, they fall in strong countries like Germany. As TARGET2 liabilities increase in some countries due to capital outflows, TARGET2 claims increase in Germany due to capital inflows.

Financial developments in Germany are the mirror-image of financial developments in the rest of the euro area. And this means that measures to ensure the stability of the euro area as a whole will also be to the benefit of Germany.

And in conclusion, Draghi insisted that the ECB's recent actions will not threaten taxpayers or fuel inflation (two major fears in Germany).

The full transcript can be seen on the ECB website:

Olli Rehn appeared to be in a pretty downbeat mood in this lunchtime's press conference (see previous post for the live video feed).

Commissioner Rehn began by warning that Europe is going through a period of "macro-economic adjustment" which will not be finished for "some time still".

He pointed to the latest lending data from the European Central Bank, which show a slight overall tightening of credit, and a fall in in demand for loans from companies and households

He also said leaders must continue to rebalance their economies if they are to return to sustainable growth,

Despite the grim message, there were also moments of mild levity:

Olli Rehn is discussing the EC's new growth forecasts in Brussels now: see the video embedded below for live footage:

(sorry if that started playing automatically - I've tweaked the embed code now)

The European Commission has slashed its growth forecasts for the eurozone, and predicted that Spain and France will fail to hit their deficit reduction targets.

The new autumn economic forecasts (released at noon) are quite comprehensive, so here are a few "highlights":

Eurozone GDP to fall by 0.4% in 2012, grow by just 0.1% in 2013 and then by 1.4%in 2014.

Greece's GDP will fall by 6% in 2012, and by another 4.2% in 2013, followed by 0.6% growth in 2014.

France's GDP will grow by 0.2% in 2012, by 0.4% in 2013 and

Spanish GDP will fall by 1.4% in 2012, and by 1.4% in 2013, before growing by 0.8% in 2014.

As flagged up this morning, those Spanish forecasts are rather more negative than the Madrid government's officials predictions.

The EC also predicted that France's deficit would come in at 3.5% of GDP in 2013 and 2014, above the 3% target.

For Spain, it predicts a deficit of 8% of GDP this year, 6% in 2013 and 6.4% in 2014.

From Brussels, Matina Stevis of the Wall Street Journal flag up some key facts from the report:

More to follow:

In other words, the EC does not accept the IMF's argument that austerity causes much more damage than thought....

Meanwhile, back in the Athens parliament.... MPs have voted that the government is not violating constitutional law by fast-tracking today's austerity bill (see 10.57am for details)

170 MPs voted that the bill was constitutional, while 47 voted against.

This means the debate over the actual bill is now underway again.

There are also reports from Greece that the Athens constitutional court has ruled that some parts of the €13.5bn austerity package violate the Greek constitution:

The ruling comes a week after a lower court ruled that the pension reforms demanded by Greece's trioka of lenders violated provisions in the Athens constitution.

Looking into it....

Protests are already taking place in Greece today, even though the main demonstrations don't begin until 5pm local time (3pm GMT).

As these photos show, local authorities workers rode their motorbikes through the streets of central Athens to register their opposition to the new austerity programme.

View image in fullscreen

View image in fullscreen

Meanwhile, over in Thessaloniki a group of people in wheelchairs are protesting outside a government building -- www.left.gr has photos.

Germany's industrial sector has received a double-whammy of bad news in the last 30 minutes.

Firstly, industrial output fell much more than expected in September. Output fell by 1.8% month-on-month, compared to forecasts of a 0.5% decline.

The German economics ministry blamed the drop the ongoing eurozone crisis, which has dented demand across Europe. It also predicted that weak orders will hit output in the last three months of 2012.

Secondly, aerospace firm Bombardier has announced that it will close a factor in Aachen, Germany, as part of a plan to cut its workforce by 1,200 people.

After the early debacle (see 10.57), a vote on the constitutionality of the Greek austerity bill is now under way...

Today's debate in the Athens parliament over the Greek austerity bill quickly became embroiled in a row over procedures and constitutional law, eating into time that could have been spent actually discussing the country's plight.

As I mentioned at 9.09am, opposition MPs immediately challenged the legitimacy of today's emergency vote on the austerity package. Their claim that the bill was unconstitutional was turned down -- a decision they then challenged, and the result was that the session was suspended while a full "roll-call" vote on the issue was organised.

However, the suspension dragged on for at least an hour (not the 10 minutes expected) – possibly while the government tried to round up its own MPs (several appeared to be on TV rather than in the chamber).

Anyway, MPs are finally back in the chamber, where Syriza leader Alexis Tsipras denounced the government's handling of the situation, and warning that:

A bill is coming that will plunge the country into a deep and protracted recession.

Syriza then withdrew its claim that the process was unconstitutional, but the Athens speaker may hold a roll-call vote anyway.

The debacle has left some Greeks despairing....

Fresh photos from Greece just arrived, showing that the general strike is having an obvious effect on Athens today:

View image in fullscreen

View image in fullscreen

Chris Beauchamp, market analyst at IG, confirms that the Greek austerity vote is now firmly in the spotlight, with the US election over:

We have been here many times before, but Greece does need to get this vote through to avoid running out of funds. With little economic data on the calendar today, this vote will be the main focus of attention.

Just in: eurozone retail sales have fallen, in the latest sign that its economy is weakening.

Retail sales across the region fell 0.2% in September, and were 0.8% lower than the previous year. The fall - which is the biggest in five months - was partly due to a drop in fuel sales as motorists cut back.

European stock markets are in a relaxed mood this morning, hitting two-week highs as the US presidential election and the Greek austerity vote fail to cause alarm.

FTSE 100: up 13 points at 5898, +0.24%

German DAX: up 26 points at 7404, + 0.35%

French CAC: up 19 points at 3497, + 0.5%

Spanish IBEX: up 42 points at 7880, + 0.5%

Italy's FTSE MIB: up 41 points at 15725, + 0.26%

The euro has risen against the US dollar this morning too, up half a cent at $1.2835.

Mike van Dulken, head of research at Accendo Markets, explains why:

The world is the same place it was yesterday, with as much uncertainty regarding the US fiscal cliff. We have seen the US dollar weaken though, on the prospect of Fed Chairman Bernanke’s job and his currency weakening QE3 programme being safe.

Greek newspaper Kathimerini has a good round-up of the impact of today's general strike, including a reminder that Greek police have insisted that several metro stations are closed today (to help them manage this afternoon's demonstrations):

the Athens metro and the Piraeus-Kifissia electric railway (ISAP) were expected to resume services starting at 3 pm

Greek police had ordered the Syntagma, Panepistimio, Evangelismos and Acropolis metro stations to be remain closed throughout the day.

The Athens tram service is expected to resume partial service by noon and full service by 1 p.m.

Suburban railway services, buses and trolleys are not operating; taxi drivers are also on strike and ferries are out of action.

It adds:

State hospitals were operating on skeleton staff on Wednesday. Pharmacies remained closed....

Continuing their industrial action on Wednesday were engineers, lawyers, prosecutors, while bank employees, municipal staff, teachers, professors and Hellenic Post staff members were also on strike.

Journalists were expected to participate in a four-hour walkout from 3 p.m. to 7 p.m., while air traffic controllers were participating in a four-hour stoppage from noon to 4 p.m.

Later this morning Olli Rehn, the European Commissioner responsible for the single currency, will release the EC's new autumn economic forecasts.

This will include projections for growth, inflation, debt and deficit across the 17 countries of the eurozone.

Some data has already leaked, suggesting that Rehn will have bad news for Spain in particular. According to El Pais, the EC will predict a 1.5% drop in GDP next year - three times as large a fall as the Madrid government expects (see here for more). If so, that would also mean Spain's recession would be just as tough next year as in 2012.

Italian newspaper Il Sole 24 Ore has also has a peek at Rehn's workings out, and reports that the EC predicts a 0.5% drop in GDP in 2013. That's slightly worse than the Rome government's forecasts.

Sony Kapoor, who runs the Re-Define think tank, commented:

The debate in the Athens parliament began with MPs arguing over how to handle today's vote on the austerity package.

The government has introduced the bill as an emergency measure, which means MPs are restricted to 10 hours of debate, However a leading opposition MP, Panayiotis Lafazanis of Syriza, immediately demanded another four hours - which would mean the vote would take place shortly before midnight Athens time (broadly when we expected it).

Lafazinis may have a point - the austerity package was only delivered to parliament on Monday evening (after around four months of grinding negotiations), so there's been little time to really analyse and discuss the package...

..as one Independent Greeks MP pointedly flagged up:

Some very grim economic news from Spain – industrial production tumbled by 7% in September year-on-year, nearly twice as large a fall as economists had expected.

The data also shows that Spain's industrial output is down by at least a fifth (depending how you measure it) since the financial crisis started:

(SA=seasonally adjusted).

Just hearing that the debate in the Athens parliament over the austerity package (known technically as the third memorandum) has begun.

Greek unions have called demonstrations for this afternoon, to pile pressure on MPs as they debate the tax hikes, spending cuts and labour reforms agreed with Greece's international lenders.

The protests are due to begin at 5pm Greek time, or 3pm GMT, in Syntagma Square and outside the ministry of finance in Athens.

The two main unions groups, ADEDY and GSEE, are coordinating them, with the communist PAME group again planning to converge its own march.

Demonstrations are also expected in other major cities.

The general strike which began in Greece on Tuesday morning doesn't end until midnight tonight, which means another day of disruption across the country.

There will be widespread disruption to transport links (although conductors on the Athens metro, for example, are expected back at work this afternoon).

Schools and government offices will be closed, while some hospitals will be restricted to emergency cases. Power workers have also downed tools since Monday night.

As usual, Living In Greece has full details of the latest strike action.

While the confetti gently drifts away in Chicago, analysts are already turning their attention to Athens.

Many analysts reckon that the Greek government will secure a narrow win tonight, but perhaps only by a handful of votes.

With one coalition partner expected to abstain (that's Democratic Left), the two others (New Democracy and Pasok) must ensure most of their MPs support the austerity package.

Reuters suggests it will be supported by 154 of Parliament's 300 MPs.

As Gary Jenkins of Swordfish Research comments:

Strange to think that over 100 million votes cast in the US may have less impact upon the markets over the next month or so than some 300 votes due to be cast in the Greek parliament this evening.

Quick look at the financial markets, where the news that Barack Obama is heading back to the White House for another four years has reassured investors in Asia.

However, the question of how the president handles the looming 'fiscal cliff' is already being discussed, amid fears that the US economy could take a nasty shunt next year.

Francis Lun, managing director of Lyncean Holdings in Hong Kong, reckoned Obama's victory means "nothing will change":

We will have ultra-low interest rates, a $1 trillion deficit, and quantitative easing.

Bernanke will keep his job as Fed chairman. As for the fiscal cliff, the president will do something to minimize the effect of tax increases and spending cuts.

The result saw Hong Kong's Hang Seng index jump 1364 points, or 0.63%, to 22,083 in late trading with Australia's S&P/ASX 200 up 0.7%.

Japan's Nikkei 225 index pulled back almost all its early falls, ending down just 2 points at 8,972.89.

Associated Press has more details.

View image in fullscreen

Good morning, and welcome to our rolling coverage of the eurozone crisis, and other important events in the world economy.

It's a crunch day for Europe as Greek MPs debate the country's €13.5bn austerity package. A vote is due tonight, and the stakes are vertiginous - should the package be rejected then Greece will be hurled into a deeper crisis; without the cuts and tax rises Athens will not receive fresh financial assistance.

And while MPs debate the latest package being forced on Greece, tens of thousands of people will be protesting on the streets of cities across the country, as the 48-hour general strike which began on Tuesday continues.

Yesterday's protests were more peaceful than we dared hope (leaving aside the firebombing of a fire engine). Today's demonstrations are likely to be busier as more transport links will be working. Can they be as trouble-free?....

It promises to be a busy day – we also get fresh economic forecasts from the European Commission this morning (more shortly), while several key figures including Angela Merkel and Mario Draghi are giving speeches.

Merkel is then due in London this evening for a working dinner with David Cameron.

As usual we'll be tracking all the major developments across the crisis, in Athens and beyond.