Greek, Irish votes reduce risks to wider Europe
Peter Apps, Political Risk Correspondent - 06.10.2009
The two countries may still be the eurozone's weakest links, but Greece's solid opposition election win and Ireland's resounding Lisbon Treaty "yes" vote should both reduce the risks to the rest of Europe.
Greece's Socialists won a greater than expected landslide election victory on Oct.4, giving them a comfortable majority to push forward an economic programme based on economic stimulus and tax rises for the rich.
On Oct.3, Irish voters overwhelmingly endorsed the EU's Lisbon reform treaty, a major hurdle for Prime Minister Brian Cowen whose government would likely have fallen immediately had the treaty been rejected for a second time.
The two countries have been the hardest hit in the eurozone by the global financial crisis, prompting some to fear they could drag down the wider bloc particularly if domestic political stalemates stymied policy-making.
"In Greece, the election results mean we will have a stronger government than its predecessor," said IHS Global Insight Europe analyst Grace Annan.
Either an inconclusive result in Greece or coalition failure in Ireland would have raised the spectre of a policy hiatus that could have left the countries too politically paralysed to tackle their economic problems.
That could have left Europe's stronger economies, primarily Germany, footing the bill.
Greek stocks rose outperformed other European exchanges and bond yields tightened relative to German debt, with investors cheered by the thought of a government with a firm mandate.
"The surprise of a strong majority is what is driving the market higher today," said Alpha Finance analyst Manousos Stathoudakis in Athens. "Longer term, this could help public finances and the stock market."
Ratings agency Standard and Poor's said policy choices by the new government could affect Greece's sovereign rating in either direction, warning that further budgetary slippage could be negative but a "clear, credible and sustainable agenda to reinvigorate reforms" could eventually benefit the rating.
Source: Reuters, Balkans.com Business News
Greece's Socialists won a greater than expected landslide election victory on Oct.4, giving them a comfortable majority to push forward an economic programme based on economic stimulus and tax rises for the rich.
On Oct.3, Irish voters overwhelmingly endorsed the EU's Lisbon reform treaty, a major hurdle for Prime Minister Brian Cowen whose government would likely have fallen immediately had the treaty been rejected for a second time.
The two countries have been the hardest hit in the eurozone by the global financial crisis, prompting some to fear they could drag down the wider bloc particularly if domestic political stalemates stymied policy-making.
"In Greece, the election results mean we will have a stronger government than its predecessor," said IHS Global Insight Europe analyst Grace Annan.
Either an inconclusive result in Greece or coalition failure in Ireland would have raised the spectre of a policy hiatus that could have left the countries too politically paralysed to tackle their economic problems.
That could have left Europe's stronger economies, primarily Germany, footing the bill.
Greek stocks rose outperformed other European exchanges and bond yields tightened relative to German debt, with investors cheered by the thought of a government with a firm mandate.
"The surprise of a strong majority is what is driving the market higher today," said Alpha Finance analyst Manousos Stathoudakis in Athens. "Longer term, this could help public finances and the stock market."
Ratings agency Standard and Poor's said policy choices by the new government could affect Greece's sovereign rating in either direction, warning that further budgetary slippage could be negative but a "clear, credible and sustainable agenda to reinvigorate reforms" could eventually benefit the rating.
Source: Reuters, Balkans.com Business News
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