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What the snap elections mean for Greece
Snap elections have been scheduled for 20 September. What does this mean for Greece and the future of the single currency, asks Matthew Partridge.
New Greek elections have been scheduled for 20 September. What does this mean for Greece and the future of the single currency?
So what's happened?
Tsirpras hopes that the results will give him a renewed mandate to implement the reforms and spending cuts agreed as part of the bailout. In a related move, 25 MPs from the ruling party, Syriza, have left to form their own anti-bailout party, Laiki Enotita (Popular Unity). This party will be lead by former energy minister Panagiotis Lafazanis.
What is the most likely outcome?
The only positive for Tsipras is that the new movement doesn't contain more well-known opponents of austerity such asformer finance minister Yanis Varoufakisor parliamentary speaker Zoe Konstantopoulou. Ian Forrester of The Share Centre thinks that the new government "may be more left-wing and opposed to the reforms and austerity measures agreed in the bailout deal".
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
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In recent years there has been a tendency for Greeks to postpone paying their taxes in the run-up to an election. This is because they are eager to hang onto their money until they are certain who is going to be in power. The Slovakian finance minister has also criticised the "cynical timing" of the announcement, which comes almost immediately after Athens received the first part of the bailout money.
After all, the fact that Greece joined the euro, let alone stayed in it for so long, is evidence that decisions aren't been taken in strict accordance of economic logic. Perhaps the only thing we can say is that, as Jennifer McKeown of Capital Economics puts it, "the threat of Grexit has far from evaporated".
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