Sunday’s elections in Greece look to have secured Greece’s continued participation in the Eurozone, for now.
Antonis Samaras’ New Democracy party secured around 30% of the vote, and is expected to try to form a coalition with Pasok – the Socialist Party, who placed third.
However, given that the two parties combined garnered just 42% of the vote, the Greek parliament may be set for further instability yet. They will, however, be helped by a rule which grants the election victors 50 extra seats in parliament.
Seeking to stabilise Eurozone markets, Mr. Samaras, in his post-victory statement, said that “the Greek people voted today to stay on the European course and remain in the eurozone. There will be no more adventures. Greece’s place in Europe will not be put in doubt.”
In addition, European Commission president José Manuel Barroso and the president of the European Council Herman Van Rompuy issued a joint statement saying that they were “hopeful that the election results will allow a government to be formed quickly” and that they will “continue to stand by Greece as a member of the EU family and of the Euro area.”
Reaffirming European leaders’ insistence on austerity measures as the way out of the Greek debt crisis, they continued by saying that “the second economic adjustment program agreed between Greece and the Eurogroup is the basis upon which to build to foster growth.”
Samaras and his New Democracy party have just three days to form a coalition. If they fail, it will pass to second-placed Syriza, whose leader Alexis Tsipras brushed off his party’s narrow defeat by claiming that “the policies of austerity have been defeated. They will not be able to push forward with them either in Greece or Europe.”
Indeed, markets initially reacted positively to the news, with gains to the FTSE Eurofirst 300 index. The Euro hit a one-month high against the dollar at $1.2747.
However, early increases have now been largely offset, and most indices are reverting back to their pre-election levels.