Greece 'has a government' - for now

The hope of political stability has returned to Greece following the announcement that a conservative-led coalition government has formed, meaning the country will remain in the eurozone for now. Following days of uncertainty due to no party winning enough votes to form a government on its own - an alliance developed between the conservative New Democracy, the country's socialist party PASOK and the Democratic Left Party. Cabinet posts will be assigned this evening, with these expected to fall to New Democracy as a result of the other two parties refusing the top positions. New Democracy leader Antonis Samaras is to take over as prime minister.

But, in a worrying development for German Chancellor Angela Merkel and her core eurozone partners, the coalition revealed that it would attempt to renegotiate the terms of Greece's €130bn European Union-International Monetary Fund bail-out. The political collective claimed it was an attempt to lead the country out of recession after five years of negative growth. Such recalcitrant sentiment is a major headache for single currency finance ministers, who are meeting in Luxembourg tomorrow.

But the head of PASOK Evangelos Venizelos called for calm, adding: "Greece has a government. New Democracy, Pasok and Democratic Left have taken on the burden of responsibility to renegotiate the bail-out agreement and the job of exiting Greece from the crisis." And Democratic Left leader Fotis Kouvelis said: "We decided to give a vote of confidence to the government that will be formed." Samaras added: "We will work hard so we can give hope to our people."

Syriza won 71 votes, coming second to New Democracy – registering 129 votes - in Sunday's poll. And the leftist party had already outlined its plan to operate as the official opposition to the government. The party claimed to represent those facing hardship on the streets, due to the enforced austerity measures attached to the bail-out and the country's history of tax avoidance, corruption and state inefficiency. The Democratic Left Party gained just 17 seats at the elections.

Greece had already received two bailout packages - of €110bn in 2010 and €130bn earlier this year – with a further €107bn of debt written off and mounting concern about the country's indebted banks. "We have to prepare very well for the European summit, it will be the first battle to change the programme and return to growth," Venizelos said.

Reacting to the announcement, president of the European People's Party group Wilfried Martens congratulated the three parties for setting "aside ideological differences" and agreeing "on a common, pro-European programme which will keep Greece safely anchored in the eurozone". He added: "Moreover, considering that Greece has no political tradition of coalition governments, I am particularly impressed by the speed in which Antonis Samaras concluded the coalition negotiations. I sincerely hope that prime minister and his government will be equally successful in bringing Greece out of the crisis and on the path of economic growth."