The Greek coalition government will make negotiations with Europe even more difficult since the voters chose a government that opposes austerity. In this context, a new financial support from the ECB seems compromised. Thus, the risk of a default of Greece, or output in the euro area, is back, what worries the markets who see the systemic risk and go back the specter of a breakup of the euro area.
Markets are more expectant, that the rhetoric – especially European – begins to move towards the need to promote growth also to offset fiscal austerity. It is important now to encourage a mix austerity – growth which could be based on calendars of deficit reduction less restrictive measures such.
If the idea of ??reviving the economy through policies of major works was discussed, it is probably not the most effective solution to the extent that European infrastructure is already well advanced.
Patrice Gautry, Chief Economist of the group Union Bancaire Privee believes “that in the short term, it is necessary for the ECB to go further in lowering interest rates to encourage a return of credit and support SMEs and consumption households remains very low in all European countries outside Germany.”