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There are four European elections you need to be watching this Sunday and the fragmentation of party political support in the past six months is showing that Greece may be the country you need to worry about.UBS economist Stephane Deo says the political landscape after Greece’s general elections are crucial since voters have moved away from the two major parties New Democracy and PASOK.
Voters have shifted support to smaller parties many of whom want to renegotiate agreements with creditors, reject austerity measures or even leave the euro.
New Democracy and PASOK on the other hand have been saying that they will renegotiate the Memorandum of Understanding (MoU) with the IMF. Deo writes:
“In our view, that suggests a degree of liberty they do not have; we think there is little, if any, appetite at the Fund or at the EC to renegotiate the agreement. Rather, the new government’s task will be daunting: €3bn of spending cuts to implement immediately and an additional €12bn to be detailed for 2013-14. Risks have risen around Greece’s ability to implement austerity measures, against a backdrop of increasingly frustrated and impatient official sector lenders.”