GREECE will keep its banks closed today after international creditors refused to extend the country's bail-out and savers queued to withdraw cash, taking Athens's stand-off to a dangerous new level.

 

The Athens stock exchange will also be closed as the government tries to manage the financial fallout of the disagreement with the European Union and the International Monetary Fund.

Greece blamed the European Central Bank (ECB), which had made it difficult for the banks to open because it froze the level of funding support rather than increasing it to cover a rise in withdrawals from worried depositors,

As Athens moves towards defaulting on a £1.1 billion loan due to the IMF tomorrow, there are fears the bank holiday might last until Sunday's referendum on the creditors' new bail-out plan.

Any default, however, could eventually lead to Greece crashing out of the euro. Such a scenario, so-called "Grexit", was dismissed as not inevitable, according to Yanis Varoufakis, the Greek Finance Minister.

He described the bail-out crisis as a "dark hour" for Europe but insisted his country had a "clear conscience" over its actions.

Prime Minister Alexis Tsipras said ECB's decision to reject Greece's request for a short extension of the bailout programme was "an unprecedented act" that called into question the ability of a country to decide an issue affecting its sovereign rights.

"This decision led the ECB today to limit the liquidity of Greek banks and forced the central bank of Greece to propose a bank holiday and a restriction on bank withdrawals," he said in a televised address.

British holidaymakers travelling to Greece were reminded to take enough euros to cover emergencies.

The Foreign Office issued updated travel advice warning UK tourists that they could face problems using credit cards or withdrawing funds from cash machines following the economic turmoil.

Each year, some two million Britons travel to Greece for holidays on the mainland and its islands; it is estimated around 110,000 are there at the moment.

"Visitors to Greece should be aware of the possibility that banking services - including credit card processing and servicing of ATMs - throughout Greece could potentially become limited at short notice," said the department.

"Make sure you have enough euros in cash to cover emergencies, unforeseen circumstances and any unexpected delays," it added.

At the weekend, Mr Tsipras came in for steep criticism from eurozone ministers trying to broker a deal after he announced that he was proposing to hold a referendum this coming Sunday on the bail-out proposals; and that he and his government would be recommending rejection.

Mr Varoufakis said it was "appalling" that the prospect of the ECB turning off the tap was even being discussed and insisted such a move would show Europe had "failed in its duty" to preserve the monetary union.

He claimed that the bail-out proposals put forward by Greek's creditors were "unviable" and would simply leave the country in the same position a few months down the line.

"Europe has to face up to the fact that it has lost its way, and particularly the people of Britain are looking upon this with a great deal of trepidation as to what Europe means," he added.

Yet, there is a train of thought that Grexit from the euro and even the EU would strengthen David Cameron's hand in securing his reform agenda as German Chancellor Angela Merkel would not want to risk the European project by seeing another, more influential member state, leaving the Brussels bloc.

Mr Varoufakis insisted there was "absolutely no reason" a Grexit was inevitable and a No vote in Sunday's poll "doesn't have to and it shouldn't" mean the country ended up leaving the single currency.

The Syriza Minister suggested there was a simple solution to meeting the £1.1bn loan repayment; cover it by using the £1.3bn Greece was owed from ECB profits in 2014.

Meantime in Whitehall, the UK Government made clear it was continuing to take steps to shield Britain from the impact of economic turbulence in the eurozone.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."