Greece will hold a new general election in June after days of talks failed to resolve the country’s political deadlock.
Greek President Korolos Papoulias has confirmed that talks to form a new coalition have failed.
He has now summoned the leaders of the country's political parties to a meeting tomorrow aimed at putting an interim administration in place to run the country until the next election which is likely to be held on either the 10th or 17th of next month.
The news has caused all of the main European stock exchanges to slump. The ISEQ index of Irish shares fell by 0.2% while the Athens Stock Exchange plunged on the news, diving 4.86% minutes after the announcement before recovering slightly.
The May 6 election left no party with enough votes for a majority in parliament and repeated efforts over nine days to cobble together a coalition government proved fruitless.
“The country is unfortunately heading again to elections,” Socialist party leader and former finance minister Evangelos Venizelos said earlier. “It is heading back to elections in a few days under very bad circumstances, because certain people coldly put their short-term party interests above the national interest.”
The protracted political uncertainty has worried Greece’s international creditors, who have extended the country billions of euros in rescue loans over the past two years. The election campaign was dominated by the debate over Greek’s dismal financial state and the strict austerity measures taken in return for the bailout – and anti-austerity parties on both the right and the left made huge gains in the vote.
Mr Venizelos said the head of the small Democratic Left party, Fotis Kouvelis, had proposed forming a two-year government, but had insisted that it include the anti-bailout radical left Syriza party.
Syriza came a surprise second in the May 6 vote, campaigning strongly on an anti-bailout platform and calling for austerity measures to be cancelled. The party’s leader, Alexis Tsipras, has refused to join any government that will not repeal the measures.
“Unfortunately arrogance, petty party politics and opportunism prevailed. Unfortunately there are many of those who trade in delusions,” Mr Venizelos said after the latest talks collapsed.
The latest developments in Athens come as new French President Francois Hollande travelled to Berlin for his first official meeting with Chancellor Angela Merkel as he attempts to introduce growth measures into the EU fiscal compact.