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Posts Tagged ‘austerity measures’

ORIGINAL (12:04 PM) The first exit polls from today’s big Greek election are out…

The Conservative New Democracy party looks to have secured the largest vote (17 – 20%).

Crucially it does not look like ND and its rival center-left PASOK have secured 39-40% of the vote, falling short of the support they needed to win 151 seats in the parliament. The lack of a majority could spell trouble for the passage of more austerity measures to comply with with the terms of Greece’s second bailout.

Stunningly, anti-austerity left-coalition Syriza (15.5 – 18.5%) seems to have the second largest share of the votes, surpassing the typically more popular PASOK.

Golden Dawn, the far right party that has caused much controversy in the country, looks set to win around 6 – 8% of the vote and enter Greek parliament.

Here’s a picture of the poll results via Greek TV:

UPDATE (1:47 PM ET): The newest round of exit polls are out from NET (via @lindayueh):

New Democracy: 19-20.5%
Syriza: 15.5-17.7%
PASOK: 13-14%

Once again, this does not appear to give New Democracy and PASOK enough votes to form a coalition on their own.

UPDATE (2:53 PM ET): According to Dow Jones, the Interior Ministry has said that New Democracy and PASOK will hold a one-seat majority. Even so, PASOK head Evangelos Venizelos has called for a national unity government, saying that the mandate provided to the two pro-eurozone parties in the election was not clear.

Via eKathimerini, these are the official interior ministry estimates:

New Democracy: 20.91%, 114 seats
Styriza: 15.27%, 47 seats
PASOK: 14.55%, 44 seats
Independent Greeks: 10.20%, 31 seats
Communists: 8.27%, 25 seats
Golden Dawn: 6.76%, 21 seats
Democratic Left: 5.90%, 18 Seats 

See also: Why The Greek Elections Matter >

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Provisional figures from the Office for National Statistics (ONS) show that the UK economy has contracted for two consecutive quarters, which means it has fallen back into recession.

The economy shrank by 0.3% in the fourth quarter of 2011 and the latest figures show a contraction of 0.2% in the first three months of 2012 after construction output fell sharply.

Production output fell by 0.4% and construction decreased by 3%, but there was slight growth, of 0.1%, in the service sector.

The ONS figures are estimated and could be revised in the coming months.

There was better news for the government yesterday with borrowing totalling £126bn in 2011-12, meeting targets.

This represents a significant decrease from £137bn in 2010-11, and from the record £159bn of borrowing under the Labour government.

However, there was a significant increase in borrowing to £18.2bn in March and an increase in the national debt to just over £1 trillion.

There is concern that borrowing may fall at a slower rate than anticipated in 2012 because of ongoing economic weakness and today’s news of a likely double-dip recession will reinforce these concerns.

Following the latest recession news the TUC’s General Secretary Brendan Barber released a statement suggesting the government’s austerity measures are not working.

“The government should look across the Atlantic and follow President Obama’s alternative that has reduced unemployment and brought growth back to the USA,” the statement said.

However the government said it was sticking to its austerity plan, despite the GDP figures.

An official spokesman for the Prime Minister David Cameron said: “The figures out this morning are disappointing but it is taking longer to recover, partly because we have suffered from the biggest debt crisis in our lifetime and partly because of what is happening elsewhere in the world, and in particular in Europe.

“The one thing that would make the situation even worse would be to abandon our plan and deliberately add more borrowing and add to debt.”

We’re seeing a big day for European upheaval today, what with the French elections and the turmoil in Holland.

There’s another country you should be keeping an eye on — The Czech Republic.

Bloomberg reports that the three ruling parties have agreed to dissolve their coalition government before April 27. Deputy Premier Karolina Peake has til the end of today to find 10 lawmakers to join her in a new government, or the country will be forced to hold snap elections.

Outside of parliament, the situation is tense. On Saturday the country is saw its largest protests since the end of Communism, with some 100,000 taking to the streets to call for an end to austerity measures, Lidovky.cz reports.

The coalition’s troubles began when Vit Barta, a senior member of VV, the smallest ruling-coalition member, was convicted in a bribery case. Barta was accused of paying a colleague $26,500 to support him and end negative attacks against him.

Initial reports suggest Peake has found enough support to survive. We should know by the end of the day.

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The big news out of the French election: Marine Le-Pen, the head of the far right wing National Front party, secured 20% of the vote in the first round of voting.

Le-Pen is now out of the race (the runoff on May 6 will be between Sarkozy and Socialist challenger Hollande), but a 20% showing for the anti-immigration, Euroskeptic candidate is a lightning bolt for France and all of Europe.

Sarkozy is now in a desperate situation, where he may have to pander to hardliner in order to win (a move that could alienate more moderate voters).

The other big event in Europe this weekend was in the Netherdlands, where a budget deal collapsed thanks to a revolt lead by another right winger: Geert Wilders.

From AFP:

The breakdown after seven weeks of talks on austerity measures between Premier Mark Rutte’s ruling coalition and Wilders’ eurosceptic, anti-Islamist Freedom Party (PVV) has destabilized the political scene.

Wilders walked out of the talks on Saturday saying his party “could not live up to” European Union demands, arguing that the cuts aimed at steering The Netherlands back within EU deficit targets would hit the elderly the hardest.

So the Netherlands, a country nobody was talking about, is now without a budget, and without a government. Elections will have to be called soon after the coalition breakdown.

There’s something that’s worth noting, which is that far-right wing parties in Europe frequently have a tinge of economic liberalism to them. As stated above, Wilders’ party opposed cuts due to the impact on the elderly. Le Pen’s solution would be for France to abandon the Euro (eventually) and monetize its debt through its own currency.

Core Europe has been worried for some time that an election in a peripheral country would produce a result that was anti-Euro. However the latest developments show strength for anti-Euro candidates in core countries.

Big thanks to Naufal Sanaullah for putting the Le Pen and Wilders situations tother.

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Citi’s economics team just published its latest Global Economic Outlook and Strategy report.

The highlight of the massive 80-page publication was Citi boosted its forecast for global GDP growth to 2.6 percent.  This is the third increase in three months (2.5% in March, 2.4% in February and 2.3% in January).

The revision was due to two reasons:

1. Japan: “We are revising up our 2012 growth forecast again, this time driven mainly by domestic demand, and now expect 2.0% growth, versus 1.5% in the March forecast. Consumer spending continues to surprise to the upside thanks to newly- introduced subsidies for eco-car purchases and a modest improvement in labour market conditions. Reconstruction demand from the earthquake is also materializing gradually.”
2. Euro Area: “With indications of a somewhat smaller decline in 1Q GDP, we have revised up our GDP forecast for 2012 from -1.2% to -1.0%, a third consecutive upward revision. However, with extra austerity measures in the pipeline and the continuing deleveraging in the private sector, we expect the euro area to stay in recession.”

Despite the upgrade, the economists continue to be relatively cautious.  Earlier this week, the IMF boosted its global growth outlook to 3.5 percent.

Here’s a summary of Citi’s massive report:

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