Greek Prime Minister Alexis Tsipras suffered a severe defeat in the European Parliament elections last Sunday, his party Syriza trailing the opposition New Democracy party by about ten points.
Syriza stormed the Greek political scene on an anti-austerity platform six years ago, then suffered a backlash after imposing cut-backs as part of a third bailout in 2015. This month the government introduced more than one billion worth of handouts in the form of tax cuts and pension payouts, unwinding some of the austerity measures—but it proved to be too late in the day, although the handouts may have averted an even steeper defeat.
Let us not forget that Greece lost a quarter of its economic output during an eight-year depression, which economists record as the worst contraction of any developed economy since World War II. Unemployment peaked at 28 percent in 2013 and remains at 19 percent.
Voters punished the ruling Syriza party for broken promises but also for a deeply unpopular agreement signed by Tsipras to resolve a long-running name dispute with North Macedonia.
Tsipras has now announced a snap election, to take place in the coming month or so. The government’s current term was due to expire in October.
The high score of 33.2 percent of the vote won by the opposition party New Democracy suggests it might manage to energise a greater voter base in the coming month. It would need about 40 percent to rule outright, without a coalition partner.
New Democracy leader Kyriakos Mitsotakis has promised a restart of the economy. He says he will lower tax on businesses from 29 percent to 20 percent in two years and lower income tax on farmers from 22 percent to 10 percent.
He also says he will seek to create 700,000 new jobs in five years and has pledged to bring home at least half a million of the 860,000 skilled workers who, according to the Hellenic Statistical Service, have left the country since 2009.
Of course, such promises are founded on the assumption that the economy will achieve an annual growth rate of around four percent per year, a goal which might not be so easy to achieve. The economic plan mostly hinges on a key promise to negotiate a new deal with Greece’s creditors, which would allow the government to spend less on repaying external debt and keep more money in the economy for reinvestment.
In his talks, Mitsotakis sounds optimistic if not bullish—but we’ve heard it all before. We just have to keep our fingers crossed.