Thursday, June 14, 2012

Wait and flee: Electoral uncertainty sends the economy into suspended animation

June 16, 2012

“What we must avoid,” confided a government minister in the spring of 2011, “is the perception among our European partners that ‘here come the fucking Greeks again’.” Job not done. The election on June 17th, a follow-up to an inconclusive vote on May 6th, will be scrutinised around Europe. A victory for Syriza, a left-wing party that did well in the first round by threatening to rip up Greece’s bail-out agreement, would fuel fears of a Greek exit from the euro. Even if New Democracy, which has broadly signed up to the terms of the rescue, pips Syriza and leads a new government, those Greeks will be back again to negotiate.

In the meantime, uncertainty over the election result has frozen the economy. Many people have simply stopped paying their bills, hoarding cash as they wait to see what unfolds. “I have plenty of customers with enough deposits to meet their bills who choose not to pay,” says one banker, before admitting that he is holding off on his kids’ private-school fees just in case.

Holidaymakers outside the country are also waiting and seeing. “It’s been a disaster since the election,” says Ioannis-John Kent, the boss of, an online tour operator, and of Aquis Hotels, which runs a chain of resorts in Greece. Aquis normally takes 300 bookings a day; that number fell to around 50 after the May 6th vote. Mr Kent argues that such caution is unnecessary: after all, an exit would increase tourists’ spending power; and what social unrest there is has been concentrated in Athens, not the islands where most foreign tourists sunbathe and gargle ouzo.

Deposits are still being withdrawn from bank accounts, though not at the same dramatic pace as occurred immediately after the May election (depositors are said to have withdrawn €700m—$877m—the following day). “I’m going to take €1,000 to €2,000 out before the election so that I can get through two weeks of chaos,” says one Athenian businessman.


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