21st August 2015
Greek prime minister Alexis Tsipras has resigned meaning the threat of a new more left-wing could now emerge and reverse austerity measure put in place.
Tsipras has stepped down as leader of the left-wing Syriza party after uproar from his party over what many MPs saw as capitulation to the EU over austerity measures and a U-turn on his promise not to inflict further spending cuts and higher taxes on Greek citizens.
Ian Forrest, investment research analyst at The Share Centre, said Tsipras’ decisions to resign had contributed to the volatility already seen in markets.
‘The drastic move, regarded by Tsipras as a moral obligation, comes only a week after the Greek parliament approved the third EU bailout package for the country, averting the risk of the country going bankrupt, the collapse of the Greek banking system and an exit from the euro,’ he said.
‘Today’s news has contributed to the volatility in the market caused mainly by events in China. It is not entirely unexpected since there was clearly a large rebellion in Tsipras’ party last week. This was against the recent €86bn bailout deal agreed by their leader with the European Central Bank and the EU.’
However, the more concerning news is the impact a new more left-wing party will have in the country.
‘With reports today of the formation of a new party comprised of rebel Syriza MPs, the outcome of the election is highly uncertain,’ said Forrest.
‘Although Tsipras remains popular, there is a possibility that the emerging government may be more left-wing and opposed to the reforms and austerity measures agreed in the bailout deal. Investors should note that this is likely to weaken the Euro and lead to further market volatility until the outcome, and the implications for Greece’s economy are known.’