Sunday, 13 May 2012

What next for Greece?

So the Greece voters have made their choice.  The centre right and socialist parties normally pick up 80% of the vote between them.  This time it was nearer 30%. The harsh austerity measures are biting and the public cannot see a light at the end of the tunnel with the current path.   No one party has been given a mandate to rule and to date no coalition partners have been formed.   Although anti-austerity parties gained support, it is unlikely that the far right and far left can work together.  

Greek newspapers.

So what next for Greece?  If deals cannot be brokered by Thursday another costly general election on the 17th June and exit from the euro looks likely.  But are the Greeks really ready to leave the Euro?  With 2 billion euros in the bank, this would last the country until mid-summer.  The second round of elections will tell the tale.  The mainstream parties are now also promising to renegotiate the austerity measures.  But will Europe let up so the Greeks can breathe a little?  With unemployment rising and the economy shrinking, is this the only way that Greece can survive?  The new French president elect, Hollande may present credible alternatives to Merkel that can accommodate Greece more and keep the Eurozone together.  It would be a headache for the euro zone if Greece left the currency, although Greece would feel the majority of the pain.   If there is a coalition that can renegotiate the austerity measures, whilst keeping Greece in the Euro, this seems to be the most credible option going forward.

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