A small sigh of relief rippled through austerity-torn Greece last night as a very narrow majority voted for a bail-out government to pull the country out of its economic downturn.

The New Democracy party, edging past the left-wing group Syrzia, received 29.7 percent of the vote, and have been welcomed by eurozone chiefs who announced the new reforms were vital and the “best guarantee” to overturn economic challenges.

The former ruling socialist party Pasok who also support the bailout, ranked third with 12.3 percent. New Democracy leader Antonis Samaras will now form a coalition government with Pasok, and take 161 seats in the 300-strong parliament.

Samaras has been advised to form a cabinet as quickly as possible. They had warned against Greece rejecting two bailouts worth roughly €240bn as it could spark a global economic breakdown.

“The Greek people have chosen to stay in the euro,” announced Samaras. “There is no time to waste. A national salvation government must bring economic growth and reassure Greeks the worst is over.”

World leaders greeted the news from the G20 summit in Los Cabos, where European austerity is high up on the agenda. German chancellor Angela Merkel called the new Greek Prime Minister to congratulate him on his victory.

Italian premier Mario Monti and French president François Holland are expected to delay travelling to Mexico in order to deal with the immediate aftermath of the election.
“We are facing some very difficult times, economically, financially, socially and politically,” said Charles Dallara, managing director of the Institute of International Finance. “We need once again, a global coordinated approach.”

Early trading figures suggested a positive reaction to the new government, as Italy and Spain’s 10-year yields have fallen five points to 6.83 percent.