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UK 'ready for Greece euro exit'

Published 29/06/2015

People queuing to use ATMs at a bank in central Athens (AP)
People queuing to use ATMs at a bank in central Athens (AP)

The Government stands ready to protect the British economy from the fall-out from Greece crashing out of the euro, Chancellor George Osborne has said.

After the radical left Syriza government was forced to order the closure of the country's banks following the breakdown of talks with its creditors, Mr Osborne said the Greek crisis was "one of the biggest external risks to the British economy".

The Chancellor told MPs he believed a "no" vote in the referendum called by prime minister Alexis Tsipras for Sunday would effectively be a vote to leave the single currency.

"I don't think anyone should underestimate the impact a Greek exit from the euro would have on the European economy and the knock-on effects on us," he said.

"The eurozone authorities have made clear that they stand ready to do whatever is necessary to ensure financial stability of the euro area and we welcome that commitment to the currency.

"Equally the British Government and the Bank of England stand ready to ensure our financial stability in the UK."

Mr Osborne said payments to the more than 6,000 UK residents in Greece in receipt of payments from the Department for Work and Pensions or public sector pensions would continue in the normal way.

However officials were seeking to contact those with Greek bank accounts - which are subject to the emergency restrictions - to offer to help them switch to a non-Greek account to ensure they can continue to access their funds.

He said the Foreign Office was issuing updated advice for British holidaymakers heading for Greece to take enough euros in cash to cover spending needs and possible emergencies, amid concerns that they may face problems using credit cards or withdrawing funds from cash machines.

European financial markets, including the FTSE 100, fell sharply on concerns that Greece was on the brink of financial collapse and a messy exit from the euro.

The FTSE 100 Index slumped 2% to 6620.5 at the close of today's session, while France's Cac40 and Germany's Dax were both more than 3% down. The pound was flat against the euro at 1.41.

Greece risks being declared in default if it fails to meet a debt repayment of 1.6 billion euro (£1.1 billion) to the International Monetary Fund tomorrow.

The repayment is believed to be dependent on receipt of the latest tranche of a eurozone bailout fund, which is itself being made conditional on Athens accepting new austerity measures.

Earlier, David Cameron said that if the Greek people voted to reject the terms set by the "troika" of international creditors - the European Commission, the International Monetary Fund and the European Central Bank - as Mr Tsipras was recommending, it was difficult to see how they could remain in the single currency.

"If they vote 'no', I find it hard to see how that is consistent with staying in the euro, because I think there would be a very significant default and a very significant problem. But it is for the Greek people to decide," he told the BBC Radio 4 today programme.

His comments were echoed by European Commission president Jean-Claude Juncker, who warned that a "no" vote would be seen by the rest of the world as a "signal that Greek wants to distance itself from the eurozone and from Europe".

At an emotional news conference, he accused the Syriza government of failing to "tell the truth" about the package on offer.

"This is not a stupid austerity package. Some of the measures of course will hurt in the near term. But the package goes beyond fiscal measures and proposes a clear way forward," he said.

"It is time for Greece's political leaders to shoulder their responsibility, to tell their people what is really at stake. That it will not be easy but necessary."

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