Greece programme execution risk remains high

The Syriza government has been under enormous pressure from within its own ranks as it has backtracked on key electoral promises made against the terms of the third bail-out. 

From the votes on the prior actions in mid-July up to the full-fledged programme vote in late August, defection among Syriza MPs implied a loss of absolute parliamentary majority approval was only achieved thanks to support from moderate opposition parties. 

This untenable situation led PM Tsipras to call for snap elections to be held on 20 September. By taking the negotiations to the wire, to the point that German Finance Minister Schauble was supporting a Greek exit, capital controls on bank deposits had to be set up to contain a fullfledged bank deposit run while economic sentiment collapsed. 

"Thus, Greek GDP is likely to contract by 2.0% q/q in H2 2015, on average. The reverse of the downtrend in unemployment, the sharp drops in consumer and investor confidence and the imposition of capital controls have probably contributed to the considerable fall in Syriza support in recent polls, together with the feeling by the most radical part of its supporters that former PM Tsipras has dropped elections promises", says Barclays.

In contrast to the comfortable lead held by Syriza up to July 2015, more recent polls signal that Syriza and ND are neck and neck.