Right after the elections of 1985, PASOK implemented a harsh austerity policy that aimed at the reduction of enormous accumulated deficits by discouraging imports, retrenching public expenses and increasing - mainly through taxation - revenues. Those employed mainly in the wider public sector reacted strongly to these measures, which were supported by the EEC through special loans.

As the economic situation deteriorated steadily, a series of dramatic events in 1988 intensified confusion and instability in the public life. The prime minister’s health problems and his family adventures allowed the creation of what the opposition called ‘void of government’. Within that situation, a gigantic economic scandal was begotten with extremely serious political repercussions, the Koskotas affair. The fact that high government cadres were involved in the affair in order to cover up the embezzlement, deteriorated the political climate and was used in a variety of ways by the opposition, which through the slogan ‘catharsis’ (purging), demanded the exemplary punishment of the accountable ones.

In the elections of June 1989 the fall of PASOK was confirmed, but the proportional electoral system deprived ND of the possibility to create an autonomous government. The Coalition of the Left gathered a remarkable percentage of 13% and constituted for the first time in Greek history a privileged political partner by participating in the joint Right-Left government, which aimed at clearing up the scandals and administering justice. Two more elections were needed for the country to have a stable government, which would be able to handle problems immediately. Finally, in April 1990, ND under the leadership of K. Mitsotakis formed an autonomous but numerically marginal government.