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It seems certain that the Greeks will go to the polls again in a few weeks to try to elect a party with a clear enough mandate to govern. This means that the Euro is likely to have a turbulent few weeks as investors consider the consequences of a Greek withdrawal from the Euro – if that’s the upshot of the Greek choice or a final loss of patience on behalf of Greece’s Eurozone partners.

However, as they say, life goes on. Earlier this week, Germany published its preliminary Q1 2012 data. The performance saw the German economy grow by 0.5% on the back of stronger domestic demand and better export figures. Given that Germany is the engine behind both the Eurozone and the wider EU, this is good news.

Eurostat, the EU’s statistical agency has just released Q1 data for the Eurozone. On the back of the German figures, the wider Eurozone has managed to avoid a technical recession (defined as two (or more) consecutive quarters of negative economic output), but only just. The bloc of 17 nations posted a quarterly growth figure of zero – since the economy of the bloc didn’t actually contract, they have avoided the spectre of a double-dip recession for at least another six months.

The German economy stood on the positive side of the balance sheet; the second largest Eurozone economy, France, produced neutral growth; the Italian economy endured its third straight quarter of recession with its economy shrinking by 0.8%. Beleagured Spain did quite well in the circumstances with its economy shrinking by 0.3% over the quarter. This is a very impressive performance when judged against the bad boy of the group’s achievement: Greece slipped further into the mire with its economy contracting by 6.2% in Q1.

The Euro has continued to lose ground against other major currencies, but this at least confers an advantage on Eurozone exports by making them more attractive: on the other side of that see-saw, the cost of imports such as oil and gas rises of course. The market is still pricing-in the cost of the Greek situation whilst the future of the nation within the bloc is still in the balance. Whilst many Greeks want to see the austerity measures strongly curtailed (if not totally abandoned), most Greeks want the country to remain in the Euro.

At the ECB fixing point on Wednesday, EUR:USD stood at 1.2738, weaker by 0.8%. It has not been lower since mid-January when the second EU/IMF bailout was being hammered out. It weakened by 0.1% against the Yen; EUR:JPY 102.53. The Euro also weakened by 0.1% against Sterling – GBP:EUR stood at 1.2512.

The inconclusive results of the Greek general election are continuing to exert downwards pressure on both the Euro and stock markets around the world. The Greek president has invited the leaders of the three largest parties to form governments, but none of them have been able to. He is currently engaged in a last ditch effort to form a government of national salvation, but the omens do not look good.

In the event that formation of a government proves impossible, the Greek people will be asked to go to the polls again next month which means that international uncertainty will drag on for several weeks more. The front runner in any new elections is likely to be the Syriza party which is on the political left. Their central plank is the populist notion that Greece needs to suspend payments on its debts to creditors and tear up the austerity accords which secured Greece’s second IMF/EU bailout. However, were this to happen, leading voices within the EU have suggested that support to Greece would cease, leaving it without the means to service its debts (Syriza’s promises not withstanding) and plunging the country into a disorderly default.

It seems plain that patience within the EU is wearing thin and the prospect of a Greek exit from the Euro is being discussed. Whilst the mood still seems to be that this would be undesirable, more voices are being heard that suggest it would hardly deal a fatal blow to the Euro. Indeed, you could argue that a Euro without the Greek millstone around its neck would be a much more viable beast. Italy, Portugal, Ireland and Spain may have significant debt problems, but all have taken strides to put their houses in order and are taking credible steps to restore their financial situations. Lingering doubts that Greece would need a third rescue package would be laid to rest with a Greek exit. Of course, the problems that Greece would face in raising capital in a post-Euro currency would be enormous; whilst the debt burden may shrink if obligations could be expressed in a post-Euro currency (far from certain), the cost of imports to Greece such as fuel and raw materials would sky rocket.

The world’s major markets were generally trading lower on Monday having ended last week down. These are Friday’s closing figures. The Dow Jones Industrial Average at 12821 (down 1.7%); the Nasdaq composite stood at 2933.8 (down 0.76%); the FTSE 100 was at 5575.5 (down 1.4%); the Dax stood at 6579.9 (up 0.28%); the Cac 40 ended the week at 3129.8 (down 1%); and the Nikkei stood at 8953.3 (down 4.6%).

At the ECB fixing point on Monday, EUR:USD stood at 1.2863, weaker by 0.6%. It weakened by 0.8% against the Yen; EUR:JPY 102.64. The Euro weakened by 0.4% against Sterling – GBP:EUR stood at 1.2500.

Following the rout of the Greek coalition government at the weekend, the freshly healed scab of the European sovereign debt crisis has been ripped open. If it is not yet the case that the wound is bleeding profusely; then there is a real danger of an infection which could lead to gangrene and amputation of Greece from the body of the single currency union – well, you know what I mean.

The two parties that between them have ruled Greece since the 1970s; and therefore were responsible for the mess that the Greek nation finds itself in, do not have the combined strength to form a coalition government. New Democracy (ND), at 18.9% of the vote was given first crack at assembling a coalition, but by the end of Monday, it was clear that they’d fall short. At that point, the baton was passed to the left wing grouping, Syriza, to attempt to pull the governmental rabbit out of the hat. In the election, they attracted nearly 17% of the vote, but their campaign focused on tearing up the EU/IMF bailout deal and abandoning the austerity measures that the deal was contingent upon. The left cannot form a government without the backing of some who supported austerity as the only way for Greece to emerge solvent from the crisis, so an impasse seems likely. It is ironic that it was the Greeks themselves who gave the world the word chaos, meaning a “gaping void”.

The world is coming to terms with the election of socialist Francois Hollande who defeated sitting president Nikolas Sarkozy at the weekend to take over at the helm of the Eurozone’s second largest economy. A major plank of Mr Hollande’s campaign was that austerity measures needed to be set aside in favour of modalities which are designed to generate economic growth. However, this is at odds with the perceived wisdom of the EC and Germany who argue that fiscal probity is the only way out of the sovereign debt crisis. The French are now openly in favour of revising the terms of the closer fiscal unity deal that was agreed at the end of last year in the wake of the abortive bid by the then Greek PM to put the bailout to a referendum.

Given that the Greek economy ranks at or about tenth place within the 17 member Eurozone and that the European sovereign debt crisis was largely triggered by the Greeks cooking the books such that they could join the EU in the first place, patience in Brussels and other European capitals is likely to be wearing pretty thin. Whilst nobody wants to see the Greeks forced out of the Euro, the price of their continued membership must be strict adherence to agreed austerity measures. Whilst the exact consequences to the zone from the secession of Greece from the Euro on the rest of the bloc are hard to determine with any real certainty, the calamity that would befall Greece is plain to see. A Greek currency would be quickly devalued, but creditors would be unlikely to accept a new Greek currency (which would be heading in only one direction) in settlement of Euro debts. Greece would find raising finances on the international bond market either impossible, or inordinately expensive. The weak Greek currency would make imports from her former partners in the bloc prohibitively expensive and Greek citizens would find their purchasing capacity outside their own borders dramatically curtailed. Still, I suspect, if that is what the Greeks want, their EU partners are unlikely to stand in their way.

If the left is unable to form a government (as seems likely), the third party, Pasok (on 13% of the vote) will be asked to try. If they fail then we are in for fresh elections and further weeks of Hellenic uncertainty.

As Europe continues to digest the weekend’s political news, the Euro has taken a further battering. At the ECB fixing point on Wednesday, EUR:USD stood at 1.2950, weaker by 0.6%. It weakened by 1.0% against the Yen; EUR:JPY 102.99. The Euro weakened by 0.2% against Sterling – GBP:EUR stood at 1.2423. On the bright side, the crisis should give Eurozone exports a bit of a boost.

The second and decisive round of French presidential elections were held yesterday, giving the voters a straight choice between more of the same, under President Sarkozy, or a move to the left through supporting socialist candidate Francois Hollande. Whilst Sarkozy was arguing that the only way forward for France, and indeed Europe, was fiscal restraint, deficit reduction and austerity, his opponent was able to argue that there had to be another way.

Given that the populace have never bought into the idea that the vast debts that our political leaders have amassed in out joint names and that they are the people who bare the brunt of harm that austerity measures inflict, the outcome of the French election should come as no surprise to anybody – least of all Nikolas Sarkovy. Mr S. has been swept from power and the electorate have returned a socialist to the Elyse Palace for the first time for 17 years. Given that the second largest economy in the Eurozone is now led by a man who wants to see the EU pact on closer fiscal union revised and believes that austerity is not the way forward for France, we are living in “interesting” times.

Mr Hollande won 51.7% of the vote to Mr Sarkozy’s 48.3% on a turnout of 80% of the electorate. Hollande’s inauguration will take place later this month and a general election will then ensue in June.

The outcome of a general election in Greece at the weekend was just as predictable. The coalition partners that had forced through a draconian austerity budget to secure a second EU/IMF bailout saw their support fall away dramatically in favour of fringe parties which advocate renegotiation of the package – a move that Greece’s EU partners will be implacably opposed to. The leading party is coalition member New Democracy (ND) which saw its share of the vote slashed from 33.5% down to 18.9%. The senior partner, Pasok, saw its share of the vote collapse from 43.9% to just 13.2% and third place. ND is expected to be asked to form a government of national unity, but the result has revived talk that Greece will be forced out of the Euro. Certainly, pressure to tone down austerity measures in favour of growth will be high on the agenda in Athens – and any other nation where the people will soon be asked to go to the polls.

The world’s major markets were trading lower on Monday having ended last week down. The Dow Jones Industrial Average at 13038 (down 1.4%); the Nasdaq composite stood at 2956.4 (down 3.7%); the FTSE 100 was at 5655.1 (down 2.1%); the Dax stood at 6561.5 (down 3.5%); the Cac 40 ended the week at 3161.5 (down 3.2%); and the Nikkei stood at 9380.3 (down 1.5%).

As Europe digests the weekend’s political news, the Euro has taken a battering. At the ECB fixing point on Monday, EUR:USD stood at 1.3033, weaker by 0.8%. It weakened by 1.2% against the Yen; EUR:JPY 104.19. The Euro weakened by 0.7% against Sterling – GBP:EUR stood at 1.2400.

The one certain sign of a sustained recovery is that unemployment eases as businesses take on staff to meet (we hope) surging demand. The other side of this coin is that continuing high levels of unemployment mean that a “proper” recovery has yet to set in. Unemployment data released by Eurostat for March continue to make gloomy reading. The level of unemployment within the Eurozone has risen to a new record level of 10.9%, standing at its worst level since the single currency was launched in 1999. The total of unemployed within the bloc now stands at 17.4 million of whom more than 3 million are younger workers under the age of 25.

Unemployment within the bloc remains patchy with the worst situation to be found in Spain where 24.4% of the workforce; some 5.6 million people, are without work. The Spanish figures marked the eighth straight month of job losses and is a new, and unenviable, Spanish record. The poor Spanish data sent the Madrid stock exchange down by 2.6% to its lowest closing values for three years.

The highest level of employment is to be found in Austria where just 4% of workers are idle. The surprise package in this month’s data was that German unemployment worsened, ending a sequence of six months of falling rates. It rose from 6.7% in February to 6.8% in March. Unemployment in the wider EU stands at 10.2%.

On a slightly more positive note, ratings agency Standard and Poor’s (S & P) has increased the credit rating for Greece. The move sees the rating move out of “selective default” to the lofty heights of a CCC rating. The move had been expected after Greece obtained its second EU/IMF bailout in March. The deal which secured the bailout involved investors agreeing to “take a haircut” (voluntary write-off) on their holdings which improved the Greek debt situation somewhat and triggered the S & P move. The new rating means that Greece is “currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial commitments”, according to S & P. Fitch’s gave a similar increase to Greece’s credit in April. Greek voters will get a chance to let their feelings about their leaders be known on Sunday when the nation elects a new government.

The gloomy unemployment data has had a negative effect on Euro sentiment. At the ECB fixing point on Wednesday, EUR:USD stood at 1.3131; down by 0.6% over yesterday’s close. It fell by 0.5% against the Yen; EUR:JPY 105.31. The Euro also slipped by 0.1% against Sterling; GBP:EUR stood at 1.2315.