Larry Elliott writes: What a difference eight months can make. When Syriza came to power in Greece in January it did so on a wave of voter enthusiasm. There was talk of an austerity party breaking the mould of post “great recession” politics. Europe’s political establishment looked on in horror. The financial markets trembled.

All the euphoria and most of the apprehension had disappeared by the time Greeks voted today. Alexis Tsipras has won but the turnout was low and the mood sullen. The financial markets are no longer concerned that Syriza will be the template for a pan-European political backlash against budget cuts or that it could start the breakup of monetary union by leaving the single currency.

In reality, there is no reason for the markets to worry about Greece, at least for now. Tsipras quickly discovered once he had swept to victory in January that he could not deliver on a mutually incompatible trio of election pledges: to end austerity, to put the economy on the road to recovery and to stay in the euro. He has achieved just one of these objectives – remaining in the euro – but at a high price. [Continue reading…]