Greece narrowly passes austerity package

"There is no doubt that Greece is undergoing a recession that is deeper and longer than expected in the previous quarterly report," the study found. "The deterioration in the labour market, with employment falling much faster than expected, uncertainties of a political and financial nature, and social unrest and industrial action have weighed on supply and on domestic demand."

The troika recommended that the €8bn cash injection - the sixth tranche from the first bail-out agreed in May 2010 - be paid to Greece as soon as possible once the agreed prior actions on fiscal consolidation, privatisation and labour market reform, which were announced by the government, have been legislated.

Even the rebel Greek politicians fighting the severe austerity measures have accepted that the tranche is vital to avoid the consequences of a disorderly default.

Ahead of Thursday's austerity vote, Vasso Papandreou, once one of the bill's fiercest critics, reversed his position to back it. The former development minister told the Greek parliament: "I have a problem with my conscience in voting for this legislation, but I couldn't handle the responsibility of the loan tranche not being paid."

Evangelos Venizelos, finance minister, had also warned rebels to pass the bill. He said: "If the law is not approved, including every single article it contains – particularly those that [Greece's creditors] and eurozone members regard a symbolic and political necessity – there is no need for me even to go to the eurogroup meeting on Friday, or the prime minister to Sunday's summit."