Greece: apocalypse postponed?

The key question is whether Greece can retain the euro and reduce austerity.

After yesterday's Greek election it is clear that most of the country's voters want two things: for Greece to remain in the euro and for it to adopt a reduced pace of austerity. The key question today is whether these competing demands can be reconciled. All of the Greek parties, to varying degrees, are calling for an easing (or abandonment) of the bailout conditions, with both the victorious centre-right New Democracy and the third-placed centre-right PASOK demanding slower cuts, higher unemployment benefits and a reversal of the reduction in the minimum wage. They are also insistent that Greece must remain in the single currency (the exception being the communist KKE, which has called for the restoration of the drachma.)

The likelihood is that the country will now be led by a grand coalition of New Democracy-PASOK. Last night, PASOK insisted that it would not join a coalition without the presence of the left-wing Syriza, which finished second with 27 per cent of the vote, prompting some to raise the spectre of a third election. Syriza, which relishes the prospect of becoming the country's official opposition, has already ruled out joining any coalition. Who will broke the deadlock? Despite its reluctance to join a "bailout coalition" (seen as an act of electoral suicide), PASOK will almost certainly drop its insistence on the participation of Syriza and, at the very least, offer New Democracy "confidence and supply".

The question will then be whether the new government can extract more favourable terms from its EU creditors. There are some signs this morning that it may be able to do so. On the Today programme, German CDU politician Michael Fuchs suggested that Greece could be given more time to repay its debts. But at this stage, minor concessions will do little to alter Greece's fate. Germany must use the window of opportunity provided by the election to finally engage in fiscal stimulus and allow the European Central Bank to act as a lender of last resort. But so long as Merkel, the high priestess of austerity, remains wedded to her current course, the eurozone is destined for stagnation at best and collapse at worse.

New Democracy party leader, Antonis Samaras, smiles at supporters after his party came first in the country's general election. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

0800 7318496