Return of Drachma: Europe tells Greece prepare for 'state of emergency' as talks collapse
GREEK politicians are drawing up plans for the country to leave the euro and return to the drachma, as the country's default and exit from the union now looks inevitable.
Hardline leftists of the Greece's ruling party refuse to bow to EU creditors demands to implement austerity measures in return for the cash needed to keep Athens afloat and are working out how to go it alone after bankruptcy.
Prime minister Alexis Tsipras has also publicly warned that if creditors don't change their stance, Greece is ready to take the plunge.
He said: "If Europe wants the division and the perpetuation of servitude, we will take the plunge and issue a 'big no'."
It comes as the latest round of talks between the Greek government and its creditors over the weekend failed to produce a deal - which moves the country another step closer to leaving the union.
Prime minister Alexis Tsipras has also publicly warned that if creditors don't change their stance, Greece is ready to take the plunge.
He said: "If Europe wants the division and the perpetuation of servitude, we will take the plunge and issue a 'big no'."
It comes as the latest round of talks between the Greek government and its creditors over the weekend failed to produce a deal - which moves the country another step closer to leaving the union.
One MP of the ruling party said to the Telegraph: "We are all horrified by the idea of surrender, and we will not allow ourselves to be throttled to death by European Monetary union." Markets on Monday morning plummeted as hope to resolve the situation without a Greek default diminishes by the day.
London's FTSE 100 was in the red, alongside major European stock markets.
Michael Hewson, chief market analyst at CMC Markets UK, said: "The fact is, unless some significant concessions are made on either side a default is now more or less inevitable, and even if a plan were agreed that was agreeable to the creditors, it is unlikely that the Greek government would be able to get it through their parliament...
It does rather beg the question as to why we can’t all end this charade which suggests a deal is even possible, and fast forward to the bit at the end of the month where the default happens and we can move on to the next stage of the process."
Mr Hewson added that it can only be a matter of time before capital controls are introduced to stop cash leaving the country.
Over the weekend, the European Commission turned down the latest proposals from the Greek prime minister for a loan deal.
It's the latest setback in negotiations after the International Monetary Fund (IMF) - another of Athens' main creditors - walked out of talks at the end of last week, citing major differences between the two sides.
On Thursday eurozone finance ministers are to meet and attempt a final effort to find a solution that is agreeable to both Greece and its creditors.
It's the latest setback in negotiations after the International Monetary Fund (IMF) - another of Athens' main creditors - walked out of talks at the end of last week, citing major differences between the two sides.
On Thursday eurozone finance ministers are to meet and attempt a final effort to find a solution that is agreeable to both Greece and its creditors.
Adam Chester, head of economic research at Lloyds Bank said: "This week could well be make or break for Greece.
"Although the deadline for the current bailout extension does not expire until the end of the month, this week’s Eurogroup meeting on Thursday could well prove to be the last realistic chance of reaching a deal.
"The reason for this is that any agreement needs to be approved by the various euro area parliaments, including the German Bundestag. Since the German Bundestag closes for the summer recess on 3rd July, there may not be time to get the legislation passed if the negotiations spill into next week."
The main Τhe main sticking points are controversial reforms to pensions and labour markets; Mr Tsipras has today again accused creditors of making unreasonable demands. But Volker Kauder, parliamentary leader of Angela Merkel's ruling party in Germany, has hit back and said Greece can't "set the terms and says ‘everyone else has to dance to our tune’. Greece needs to get back to reality.”
