Market relief at PM’s decision

A general sense of relief on the markets greeted the prime minister’s decision not to call snap polls following the results of Sunday’s first round of local and regional elections. The prospect of early general elections next month, raised by George Papandreou late last month depending on the results of Sunday’s polls, had created great unrest among investors as well as local businesspeople in general. The German government had actually sent an informal yet clear message that a snap poll would seriously diminish the chances of an extension to Greece’s loan repayments. Now that the markets have calmed down and the spread between the Greek benchmark 10-year bond and the Germany bund contracted somewhat yesterday to 889 basis points from 927 bp late last week. The Athens stock market also closed with gains, though not as big as the early session’s euphoria had originally suggested. Foreign observers also stressed that a snap poll could have left Greece in a protracted period without a strong government, exactly what a country in crisis doesn’t need, they suggested. Some others noted, however, that the ground lost by the government in the local elections will not allow the specter of early elections to disappear just yet. Relief was more obvious among Greek trade bodies, which saw the premier’s decision as the last chance for the market to have any prospect of recovery anytime soon. The president of the Federation of Hellenic Enterprises (SEV), Dimitris Daskalopoulos, said: «The people have assumed their responsibility at the voting centers, it now falls to the political system to assume its own. People have undertaken the cost of the [streamlining] effort, but deservedly expect to see its fruition.» Vassilis Korkidis, head of the Confederation of Greek Commerce (ESEE), stated poignantly that «the scenario of a snap poll was a dangerous risk that could have driven the country to an absence of government, the end to its borrowing and national bankruptcy.» He explained that political uncertainty always scares away entrepreneurship, let alone amid such financial instability. Finally the president of the Athens Chamber of Commerce and Industry (EBEA), Constantinos Michalos, stressed that »the business world is satisfied with the premier’s decision against dragging the country into early elections, which would have generated additional problems for the economy in a particularly crucial period.»