European and local trade unions held a massive demonstration in Budapest Saturday to protest against austerity measures, which European finance ministers said were unavoidable.

Organisers estimated the turnout at around 40,000 people, who marched along the main avenue of the Hungarian capital, as EU finance ministers were wrapping up a two-day meeting. Hungary currently holds the presidency of the European Union.

The unions harshly criticised the European Union's push for more convergent economic governance, fearing wages would be sacrificed for the sake of competitiveness.

The marchers held up placards saying "No austerity" and demanded "fair pay and jobs" and also bashed bankers and European leaders, in particular German Chancellor Angela Merkel and French President Nicholas Sarkozy.

"We want jobs, growth, our welfare state intact, and we are not going to pay for bankers' mistakes," European Trade Union Confederation leader John Monks told the crowd.

"The ministers are locked into this orthodoxy that there has to be suffering before everybody can have some growth. I think this is completely wrong," he told AFP before the march.

Alongside the European demonstration, Hungarian trade unions protested against home-grown austerity policies of the centre-right government of Prime Minister Viktor Orban.

They also complained about the lack of consultations prior to government decisions.

"There is no consultation at all between the government and the unions. Social dialogue has ceased in Hungary. This government does not negotiate with the society," Istvan Gasko of the local Liga Union told AFP.