Greek PM Tsipras resigns and calls snap elections

Greek Prime Minister Alexis Tsipras resigned after the close of markets on Thursday and called for immediate elections to take place on 20 September, just when a semblance of stability seemed to be spreading over the Hellenic nation.

Almost eight months after being voted into power on a wave of anti-austerity support, Tsipras confirmed earlier rumours and said he was stepping down but would stand at next month's election with a new mandate.

"The aim is to hold elections on 20 September," a government source told reporters after emerging from talks Tsipras held with his advisers.

In a televised address, Tsipras said he had exhausted the mandate which the public gave him in January and suggested he would stand at next month's general elections as a more moderate candidate, moving away from the staunchly leftist platform with which he won earlier in the year.

Tsipras had lost a large portion of his Syriza party's support, with the most recent Athens parliament vote on 14 August on the details of the country's new bailout programme, 32 of his party's MPs voted against it and 11 abstained, leaving the coalition government significantly short from an absolute majority in the Parliament.

"I want to be honest with you. We did not achieve the agreement we expected before the January elections," he said. "I feel the deep ethical and political responsibility to put to your judgment all I have done, successes and failures."

Confirmation of his decision on Thursday came fresh on the heels of the signing of the loan agreement and the first disbursement, of €13bn, from the ESM that enabled Greece to make a €3.2bn repayment to the European Central Bank.

But Evangelos Meimarakis, the leader of opposition party New Democracy, has pledged to “explore all avenues” to avoid snap elections, suggesting he may try to form a new coalition government from the current parliament, preventing another general election.

With this out of the way and recent polls continuing to show strong support for Syriza, Tsipras will stand again confident of re-election.

A poll published on 14 July said that if a new government were to be formed, 68% of the population would favour Tsipras as its leader, with Syriza remaining ahead in polls conducted during the current week.

After the news emerged, Greek two-year bond yields jumped 78 basis points to 12.15%, while earlier in the day as rumours circled Greek stocks closed down 3.5%.

"Today's news comes as no major surprise," said Barclays, "since noise surrounding political instability has been on the rise since spring and reached its climax on 13 July, where Tsipras effectively completed his policy U-turn."

“The Greek Prime Minister Tsipras’s move to step down and call snap early elections on 20 September could elevate programme implementation concerns and, potentially, puts future official sector disbursements at risk,” ratings agency Moody's said in a statement.