Sep 10th, 2015, No clear winner emerges from Greece’s pre-election debate

September 10^th,

     ·  the leaders of seven Greek political parties took part in a three-hour live televised election  debate, clashing on various issues including economy, unemployment, social policy, public administration, education, health policy, immigration/refugees crisis, security, foreign and defence policy. All seven political leaders had agreed before to eliminate the leader of Golden Dawn (far right) from yesterday’s debate.
 

it was the first debate between the two main contesters of forthcoming elections, SYRIZA’s Tsipras and New Democracy’s Meimarakis. Snap polls taken afterwards gave different verdicts and no clear winner. The following day, all political parties agreed on the following points: a) debates need to be redesigned and become more informative to electorate b) there was no winner in yesterday’s debate.

There will be another debate next Monday 14^th September, among the two main rivals Tsipras and Meimarakis  

·         the Hellenic Federation of Enterprises (SEV)intervened in pre election debate, by publishing a new strategy for growth, which consists of four points, such as: 1) Promotion of a new national growth strategy, with emphasis on cost effective investments, 2) Implementation of a new strategy for Greece's industrial and manufacturing sectors, which will be managed by a separate Ministry of Industry, whose portfolio will include energy, environment, investments, innovation, internationalisation of economy etc.) 3) implementation of e-governance to tackle tax evasion and enhance productivity in justice system. 4) creation of a new governmental body, which will monitor the implementation of structural reforms and will report directly to the Greek Prime Minister,  

·       the outlook of Greece’s employment for the 4^th quarter of 2015, has been significantly   deteriorated due to increased political uncertainty  according to the Manpower Employment Outlook Survey which took place among 750 local employers. More specifically, the report shows that 18% of Greek employers foresees a reduction of their staff by -18%, while 26% of employers don’t know if there will be any change in their staff. Finally, 51% of employers foresee that there will be no changes in their staff and ONLY 5% foresee new hires.  
 

The most critical finding of this survey is that the percentage of employers who don’t know what is going to happen as regards their staff, increased to 26% (from 5% of previous quarterly report). Finally, the report predicts contraction of employment in 7 out 9 industrial sectors i.e. Agriculture, Trade, Public sector, Energy/Electricity, Construction, Transportation / Telecommunication and Manufacturing sectors. In contrast, the ManpowerGroup report predicts an increase of employment in Financial and Tourism sectors.

·         It seems that Greece’s caretaker government has started to manage effectively refugees’ crisis which has hit mainly Eastern Aegean islands. However, crisis currently hits low income suburbs of Athens city centre and areas close to northern borders of Greece.

·         Greece’s 10 year bond yield dropped below 9% and currently trades at around 8.6% (it was close to 20% just before the agreement of July 13^th) while the 2 year bond yield trades at around 10.5% ( it was close to 58% just before the agreement of July 13^th)

Risk assessment: In general, there has been a significant reduction of Greece’s political risk and this gradually impacts positively the yield of local government bonds.

Last night’s pre-election TV debate among the seven political leaders was spineless and dull mainly due to a) the limited time allocated to each leader to cover each subject b) their efforts to avoid mistakes and c) in contrast to previous elections, now most parties agree on the implementation of MoU .

Local pre-election period evolves smoothly, without any incidents and closer to European standards. Although some politicians try to use aggressive and/or populist rhetoric, most parties agree that the implementation of 3^rd MoU is one way road.

However, Greece is heading on snap elections amid deterioration of local economic outlook due to political uncertainty. The lack of confidence appears to be the main factor which impacts negatively local economic outlook. The formation of a new, strong, pro-Europe government to implement 3^rd MoU and Banks’ recapitalization, appear to be the critical path to achieve restoration of confidence.