Strikes hamper Greek rescue

Wildcat strikes in Greece have prevented the country’s bureaucrats from finalising next year’s vital budget figures, potentially holding up this month’s release of sorely needed fiscal aid and capping an ignominious quarter for global markets.

Despite a tentative improvement in sentiment over the past week, mounting fears over a potential Greek default and the tepid pace of the global economic recovery led to one of the worst three months on record for financial markets.

The S&P 500 dropped 2.5 per cent on Friday, a fall of 7.2 per cent in September and 14.3 per cent decline over the third quarter, its worst performance since the final three months of 2008.

The FTSE All World index was had its worst decline since the three months following Lehman Brothers’ collapse in September 2008. It entered official bear market territory in September, shedding more than a fifth from its high in May. The FTSE 100 fell 13.7 per cent in the third quarter in its worst three-month performance since 2002.

Striking civil servants have blocked access to Greece’s statistical agency building in Athens since Tuesday, undermining efforts by Elstat, the statistics agency, to bring Greek figures in line with EU standards after years of fudging.

The so-called troika – the European Commission, the European Central Bank and the IMF – are in Athens to inspect the budget figures before deciding whether to release the next €8bn ($10.9bn) tranche of its current bail-out loan.

”We will miss [Friday’s] deadline for sending final debt and deficit figures for 2010 to Eurostat, the Commission and the troika, because I and my team can’t get into the building,” Andreas Georgiou, chairman of the Elstat statistics agency, told the Financial Times. “These detailed figures are urgently needed for the troika to recalibrate the draft budget, if required, before it goes to parliament on Monday.”

Mr Georgiou, a former IMF official, was hired by the government last year with a brief to set up an independent statistical agency.

He said members of the agency’s board have tried to undermine EU-mandated work practices. One former board member faces a criminal investigation for allegedly hacking into Mr Georgiou’s work computer.

Striking civil servants blockaded government ministries on Friday, including the headquarters of the finance, transport and health ministries, in order to prevent troika officials from collecting data needed for the current review.

Speaking after a meeting in Paris with George Papandreou, Greece’s prime minister, French president Nicolas Sarkozy said the Lehman collapse had plunged the world into economic crisis but Europe would not allow the same thing to happen. “The failure of Greece would be the failure of all Europe,” Mr Sarkozy said. “It is not possible to let Greece fall for moral and economic reasons.”

As the eurozone crisis gathered pace in the third quarter, the dollar rallied against all but two of the 31 largest currencies as investors fled riskier assets and piled into US treasuries and other havens. Emerging markets provided no succour. Fearing a rerun of the mayhem that followed the Lehman collapse, investors have withdrawn almost $6bn (£3.8bn) from emerging market bond and stock funds over the past week.

Hong Kong’s stock market suffered its biggest quarterly loss in a decade, and borrowing costs for emerging market governments and companies hit a one-year high on Monday.

Bankers and economists expect the last three months of the year to be bumpy as well, with much depending on the outcome of Greece’s sovereign debt negotiations.

“It all boils down to what happens on the policy front,” said Mark Bamford, head of global fixed income syndicate at Barclays Capital. “There are major issues still to be resolved on both sides of the Atlantic.”

Additional reporting by Robert Cookson in Hong Kong and Hugh Carnegy in Paris