Greece's new political leaders struck a note of defiance yesterday as they began scrapping measures that had been planned as conditions of the struggling country’s bailout packages.
Investors in the country panicked as the new Syriza-led government said it would reverse privatisation plans and re-hire some public sector workers.
Strong rhetoric from the new Greek finance minister also added to the sense of unease, while fears over the country’s banking sector saw financial stocks suffer their sharpest one-day fall on record.
UK-educated economist Yanis Varoufakis was appointed yesterday and immediately took aim at his predecessor Gikas Hardouvelis – despite being sat just a few feet away from Hardouvelis as he spoke.
Varoufakis slammed the previous Greek government’s policies “a toxic mistake... that took a toll in human lives, either lost or undermined.” Reflecting the bold swagger of Greece’s young and radical new government heads, Varoufakis said he wanted to usher the Eurozone towards a “new deal” – borrowing a term famously used to describe spending policies launched by the US during the Great Depression of the 1930s.
The new finance boss – dressed casually without a tie and with his collar turned upwards – has previously referred to Greece’s policies in recent years as “fiscal waterboarding that have turned this nation into a debt colony”.
The Syriza-led government, headed up by Alexis Tsipras, is already unnerving financial markets. The immediate health of Greece’s banking system depends on emergency credit it is receiving from Europe that is conditional on Greece coming to an agreement with the EU and IMF.
The interest on 10-year Greek government debt jumped by 0.86 percentage points to 10.34 per cent yesterday. The equivalent interest rate for Italy is 1.59 per cent.
The Athens stock market lost 9.2 per cent of its value during a third day of turmoil. Stocks in the four biggest Greek banks were hit particularly hard, falling by around 25 per cent after facing heavy losses every day since Syriza’s landslide victory.
Stocks in Athens have lost 30 per cent of their value since the prospect of a Syriza-led government arose in early December. Meanwhile ratings agency Standard and Poor’s issued a warning on Greece’s debt.