Greek Prime Minister Kyriakos Mitsotakis pummeled his opposition in Sunday’s national election, moving a step closer to getting another four-year term and sending a signal to markets that the premier’s investment-friendly policies will continue.
Mitsotakis’s center-right New Democracy received almost 41% of the vote compared to about 20% for the leftist Syriza party of former premier Alexis Tsipras. The premier fell short of the threshold to immediately form a government on his own, meaning he will likely opt for another ballot in about a month rather than try to form a coalition.
Voters were convinced by Mitsotakis’s pledge to build on one of the European Union’s fastest economic recoveries that has Greece on the cusp of a return to investment grade. The three top parties will have about nine days to see if a coalition is possible, but that’s unlikely since all the main group leaders have ruled out working with each other and because Mitsotakis has a clear path to a decisive victory if another vote is held.
“New Democracy has the people’s approval to rule alone,” Mitsotakis said Sunday night. “I know how much work we have ahead of us, which requires a government that truly believes in reforms and the ability to implement them.”
Sunday’s election was the first under a new proportional representation system that effectively means that a candidate needs around 48% of the vote to be able to form a single-party government. If a second election is held, the winner will get a bonus of as many as 50 seats, meaning that the threshold falls to about 38%, depending on the number of parties that qualify for the 300-seat parliament.
“The results were well beyond market expectations with New Democracy being the clear winner,” said Alevizos Alevizakos, managing director of Axia Ventures Athens branch. “While it’s highly unlikely that a government will be formed after this election, the next two days won’t be as volatile as previously expected.”
Voters were particularly focused on Greece’s economic transformation, which has seen gross domestic product recover to just about where it was when Greece defaulted on its debt in 2010. Unemployment has more than halved from its peak of 28% and the country’s stocks and bonds have soared.
The risk premium on Greek government debt compared with Germany’s has fallen by about a third over the past year. They trade with a similar yield to Italian bonds. The rebound in the economy has set the nation on track to recover its investment-grade status after 13 years.
The economy is expected to reach €223 billion ($243 billion) this year, roughly what it was in 2010, estimates from Eurostat show.
“We rather expect a strong bounce with solid market volumes in the coming period,” said Alevizakos, who expects that New Democracy will be able to form a strong single-party government in the second election “that will be supportive of all Greek assets in the short and long term.”
The election was overshadowed by several incidents that weighed on Mitsotakis’s campaign in the run-up to the vote. These included a train crash earlier this year that left 57 people dead and a scandal in which the prime minister confirmed that his intelligence agency spied on an opposition candidate.
Still, New Democracy’s margin of victory was the largest since 1974 and its share of the vote rose slightly since the last election in 2019. Mitsotakis’s party won in all but one of the 59 electoral districts.
Starting Monday, Mitsotakis will have three days to see if he can form a government. If he fails, the mandate to try to secure a majority in parliament goes to the second party for another three days, and if that also fails then the third party will also have another three days to negotiate a possible administration.
If all efforts are unsuccessful then the president can invite all party leaders to explore the possibility of forming a grand coalition. If this attempt also fails — or if the president decides not to initiate the process — then Greeks will be called to vote again in about a month.
Mitsotakis called for the process to be accelerated in order to arrive at a stable “government solution.”
(Adds additional photos from election day.)
