ATHENS, Greece (AP) -- Greece's coalition government on Thursday reported a steep drop in the budget deficit in 2012, but unemployment rose again at an alarming rate as state spending cuts continued to hurt the economy and erode living standards.
Deputy Finance Minister Christos Staikouras said provisional data showed the annual budget shortfall was 8.2 percent of gross domestic product in 2012, down from 10.9 percent the previous year and slightly better than the target of 8.4 percent.
Greece has been struggling through a severe financial crisis since late 2009, and it has been dependent on international rescue loans since May 2010. To get the bailout, the conservative-led government has slashed salaries, cut spending and increased taxes to reduce debt. The measures, however, have also kept the country in a deep recession now in its sixth year. Tens of thousands of businesses have shut down.
"The massive sacrifices being made by the Greek people are producing results," Staikouras said of the drop in deficit. "But the course we are on remains long and hard."
A new opinion poll published Thursday showed that the main partner in the three-party coalition government, New Democracy, has regained a slender lead over the main opposition Radical Left Coalition, or Syriza.
The Public Issue survey for private Skai TV gave ND 29 percent, over Syriza's 28.5 percent. The ultra-right Golden Dawn party came third at 10 percent. The company's previous poll in December had given Syriza a 4.5 percent lead over ND. The phone poll conducted Jan. 4-8 had a maximum 2 percent margin of error.
Critics of the government, which was formed with a four-year mandate after elections last June, argue it is chasing financial targets set by the rescue lenders at the expense of the Greeks. Poverty is rising rapidly and the state has put off paying many of its bills, on everything from electricity to one-off retirement payouts.
The impact was underscored by new statistics released Thursday showing unemployment reached a stunning 26.8 percent in October.
The Statistical Authority said the unemployment rate increased from 26.2 percent in September 2012 and 19.7 percent of October 2011.
Young Greeks are the worst affected, with 56.6 percent of those aged between 15 and 24 out of work.
Also Thursday, Socialist lawmaker Christos Aidonis quit the coalition government and declared himself an independent, protesting at the lack of action taken to investigate people on a list of Greeks with Swiss banks accounts for potential tax fraud.
His move reduces the number of lawmakers backing the government in the 300-member parliament to 163. It also means that continued support from all three parties in the coalition — ND, Socialist PASOK and Democratic Left — is now required to keep the government afloat.
Former Socialist Finance Minister George Papaconstantinou is facing a parliamentary investigation into his handling of the list of 2,000 Greeks who held accounts at HSBC bank in Switzerland until 2007. The list was drawn from data on 24,000 customers reportedly stolen from the bank.
Prosecutors said the names of three of Papaconstantinou's relatives had been illegally removed from the list of Greek account holders.