Greece won't exit, says Merrill Lynch's Bill O'Neill
Greece will not immediately exit the euro following Sunday’s elections, predicts Merrill Lynch Wealth Management’s Bill O’Neill.
The group’s chief investment officer for Europe, Middle East and Africa comments on the growing unease in the run-up to the Greek elections this weekend, when left-wing coalition group Syriza is predicted to perform strongly.
“We do not forecast an immediate exit following the elections for two reasons: the costs of exit for all parties involved still outweigh the benefits; and an exit would likely be the last option for Syriza were they to win the election, since it would most probably be a long and drawn-out negotiation process between Greece and the European institutions,” O’Neill says.
While Syriza is leading in the polls, it is unlikely that it will secure a large enough majority to avoid the situation its predecessors found themselves in – namely, under intense pressure to form a coalition government.
“A second failure to form a government leaves the country at risk of running out of euros by early July were the Troika to refuse payment of the next tranche of the bailout package,” says O’Neill. (article continues below)
Syriza has become synonymous with the prospect of a Greek departure from the eurozone, although party leader Alexis Tsipras has previously signalled that such a decision would only be decided through a nationwide referendum.
A recent speech by Tsipras emphasised the party’s position on the current repayment schedules and the need for “new debt rescheduling in order to drastically reduce it” or a moratorium on all payments until the financial conditions stabilise.
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