Greece is bracing for a repeat general election, after its centre-right leader failed to win leftwing support to form a "national salvation government" in the wake of Sunday's inconclusive outcome at the polls.
The failure of Greece’s two main pro-bailout parties to win a majority compounds a deteriorating economic situation as the government of Lucas Papademos, the technocrat premier, prepares to leave office next week, making way for a caretaker administration.
Mr Papademos, a former European Central Bank vice-president, called for political stability “so that the sacrifices of the Greeks don’t go to waste … after we have already covered a large part of the difficult journey towards rebuilding the economy".
Decision-making on further reforms, including finalising a new €11.5 billion medium-term austerity package, will be stalled until a new administration is in place. “Only non-political measures can go ahead”, the official said, admitting that it will be hard to push forward with 77 separate structural reforms due to be completed during June. The stalemate puts at risk the timetable for disbursement of Greece’s next loan tranche from its second €174 billion bailout. Despite a recent transfer of €3.5 billion to cover financial emergencies, the country faces being unable to meet pension, salary and debt commitments next month.
It was not clear whether New Democracy and Pasok would be able to regroup quickly after their worst showing at the polls in more than 30 years. Some analysts doubted whether a second election, following on so quickly, would trigger a more moderate voter response.
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