The Greek government's packages austerity measure has received parliamentary approval, after securing 155 votes from 300 members of parliament.

The key vote took place amidst the backdrop of a 48-hour strike, which has seen clashes between protestors and police.

The package paves the way for the latest tranche of a multi-billion euro deal, but certain parts must first be ratified at a second vote tomorrow.

Public sentiment has been stoked by the controversial package, put forward the Greek prime minister George Papandreou (pictured), includes tax hikes and spending cuts.

Support for the bill was needed to unlock a €100 billion (£98 billion) tranche from a International Monetary Fund and the European Union. The austerity package is expected to raise more than €14 billion in taxes and includes a €14 billion in spending cuts.

However, economists and fund managers are warning that Greece still faces tough challenges ahead.

Stuart Thomson, chief economist at Ignis Asset Management, said the prospect of a Greek default on debt in the medium term was a 'virtual certainty'.

He said, 'The package is the worst of its kind, focusing on tax hikes rather than spending cuts, and is likely to prolong the recession and lead to higher unemployment and deficits.'

The economist said the next tranche of funds in Septemeber was 'a likely source of trouble' for the Greek economy.

Thomson added, 'The key question remains whether this will be an orderly or disorderly default. An orderly default will occur when the Greek authorities have achieved primary budget surplus enabling it to fund itself on a day-to-day basis.

'This could take place within the Eurozone, i.e. a debt devaluation rather than a currency devaluation to the new drachma, but the authorities would still need funds to bailout the domestic banking system. There would also be contagion to the other smaller European periphery with investors expecting similar action from Ireland and then Portugal, but it would be easier to contain the damage to Spain and Italy.

'A disorderly default would result in immediate bankruptcy of the Greek state and most likely exit from the single currency. The resulting contagion would be worse for all of the other PIIGS [Portugal, Ireland, Italy & Spain].'

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