Britain preparing for ‘growing’ Greek default risk: official

George Osborne

George Osborne

Britain is getting ready for a possible Greek default and exit from the eurozone given the “growing” risks, a finance ministry spokeswoman said Wednesday.

“Given the uncertain global economic situation, not least the risk that we now see growing in Greece of a potential default and a potential exit from the euro, we are taking all steps to prepare and protect ourselves,” the spokeswoman told AFP.

She did not give further details on contingency plans.

“It is in Britain’s interest to see a stable euro area. We continue to urge a responsible resolution to the situation to avoid ‎further and greater risks,” the spokeswoman added.

Britain’s Chancellor of the Exchequer George Osborne had already spoken to parliament on Tuesday about the risks of a Greek default.

“People should not underestimate the damage that that would do to financial confidence,” he said.

To prepare for the possibility of “Grexit”, Osborne said that “the best thing that a government can do is to ensure that it is living within its means, that it has a productive economy and that its public finances are in good order. That is what we are doing”.

Britain is an EU member but is not part of the eurozone although its financial hub, the City of London, could be badly hit if Greece is forced to leave the euro.

The Greek central bank warned for the first time on Wednesday that the country could suffer a “painful” exit from the eurozone and even the EU if it fails to reach a bailout deal with international creditors.

The warning comes as negotiations over the release of the last 7.2 billion euros ($8.1 billion) in rescue funds from Greece’s massive bailout from the International Monetary Fund, European Union and European Central Bank are deadlocked, with payment deadlines looming.

All eyes are on a meeting of the 19 eurozone countries to take place Thursday in Luxembourg.

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