Greece Back In Crisis
Markets fall on fears a new government will reject the terms of the country’s financial bailouts and take Greece out of the euro.
Greece has been plunged back into crisis mode by a snap parliamentary election that could yield a government opposed to the country’s financial reforms.
The Athens Stock Exchange was 10% down when it was confirmed that the government of prime minister Antonis Samaras had failed to secure the election of a new president, triggering the national poll.
The radical leftist Syriza party, which wants to renegotiate Greece’s bailout agreements that have prevented Greece defaulting on its debts and roll back on austerity, is favourite to win the general election.
The prospect of a new government reneging on the terms of the rescue deals – agreed with the EU and International Monetary Fund – prompted the stock market sell-off.
Investors are worried the country’s very future in the euro is a core risk as polls suggest most voters favour a return to the drachma following five years of crippling cuts and job losses.
Syriza leader Alexis Tsipras said the snap election would herald an end to austerity.
He said: “With the will of our people, in a few days the bailout agreements of austerity will be history.”
In a televised address Mr Samaras said: “Tomorrow I will visit the president and request that elections be held as soon as possible, on 25 January.”
He had previously warned that an election could be “disastrous” while the country is negotiating with its creditors.
Greek banks bore the brunt of the hit to the Athens market, with Bank of Piraeus dropping 16.7% to record lows while National Bank of Greece fell 14.2%.
The Greek result hit stock markets in Spain and Italy particularly badly too as they were also badly damaged by the Eurozone economic slump and sovereign debt crisis which led to Greece’s 2010 bailout.
The country had been progressing well in its recovery though cuts to core services remain deeply unpopular and unemployment is stubbornly above 25%.
