Greece now looks likely to default on loans and could exit the euro as banks close and prime minister Alexis Tsipras calls a referendum.
Shares have fallen around Europe today (29 June) as markets react to the ongoing financial crisis in Greece, where banks are expected to remain closed all week.
The FTSE 100 ended the day down nearly two per cent, as banking and travel stocks reacted negatively to Greece inching closer to leaving the euro.
Greek prime minister Alexis Tsipras has put capital controls in place to prevent the collapse of the country's banks. ATM withdrawals are limited to €60 per day and long queues have formed outside ATMs as residents rush to access their money.
To the surprise of Greece's creditors, Mr Tsipras has also announced a referendum, giving the people the chance to voice their opinion on the austerity measures creditors are insisting on in the aid package that has been put forward. The ballot is due to take place on Sunday, and will pose the question: "Do you accept the institutions’ proposal as it was presented to us on 25 June in the Eurogroup?"
Greece's residents are struggling to come to terms with the situation, with one, 50-year-old Evgenia Gekou of Athens, telling Reuters that she "can't believe it".
"I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry," she said.
Yannis Kalaizakis, a 58-year-old plumber who was trying to withdraw money from an ATM, added that the situation is "a mess".
It now looks increasingly likely that Greece will default on the €1.6 billion loans from the International Monetary Fund tomorrow and many international leaders are blaming Mr Tsipras for allowing the situation to reach its current point.
German chancellor Angela Merkel and French president Francois Hollande both asked Mr Tsipras to engage in another round of negotiations, but with the request going unanswered it looks unlikely that a last-minute deal will be reached.
Pic: Trine Juel
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