‘No’ vote, Grexit not a foregone conclusion

The Greek referendum appears to have led to a large victory of the 'No' vote. At 1am CET, with 90% of the vote counted, the 'No' was largely ahead with 61.5% of votes. A "reject"vote at the referendum marks a first step towards Grexit and now 65% chance of Grexit is seen. 

Avoiding Grexit is possible but will be difficult. Although French policymakers have signalled their willingness to reach a deal, there is no indication that the Troika stands ready to offer Greece a better deal in terms of reform effort, all the more as Greece will need a much larger bailout package (€60-80bn) than what was previously discussed.

In the coming weeks, political uncertainty will remain despite the large victory of the 'No'. First, Greek Constitutional Court will have to legitimate the referendum. Secondly, thepro-European President Pavlopoulos might opt to resign this week, triggering new elections, to be held probably in late July or early August.

A full formal exit is unlikely to happen in the next few days or weeks. Both sides will try to resume negotiations in the coming days. Euro area policymakers are expected to make a statement that places the ball in the court of Athens. If this process fails, both sides are expected to coordinate their actions to manage the exit, says Societe Generale.