Bank of Greece issues grave warning of Grexit as British government prepares for fallout - as it happened 17 June 2015

Click here for Thursday's live coverage.

• Greek chief negotiator: we can't pay without bailout, but will strike a deal if it is "economically viable"
• Protests planned across Greece tonight amid rumours of a compromise deal
• British government accelerating preparations for Grexit as Bank of Greece describes need for a deal as a "historical imperative"

18.13

Crowds are beginning to gather in Athens for the Syriza-sponsored protest this evening.

17.20

Here's a very handy guide to upcoming Greek-related dates.

17.17

The ECB has agreed to continue the emergency liquidity assistance for Greek banks - as expected. It also raised the amount of cash available.

The country’s financial system depends on central-bank liquidity to replace deposits withdrawn amid the political uncertainty over the country’s place in the euro.

17.05

In a riposte to the Bank of Greece's warnings today, parliament's speaker Zoe Konstantopoulou from the far left of Syriza published a report from the “Debt Truth Committee” that she set up, which said that Greece’s debt is “odious” and shouldn’t be repaid. She refused to accept the Bank of Greece's report.

The report said: "...the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector."

16.44

The secretary-general of the German Christian Social Union, Angela Merkel's sister party, has accused the Greek government of not having grasped the seriousness of the situation in the debt talks.

"The Greek government apparently hasn't realised the seriousness of the situation yet," Andreas Scheuer told Rheinische Post.

"They are behaving like clowns sitting in the back of the classroom, although they have received explicit warnings from all sides that they might fail to pass to the next grade."

16.05

Greece's chief negotiator willing to make concessions - but they can't pay without bailout

Greece is willing to make concessions to strike a deal with creditors as long as it is "economically viable", but will not cut its existing pensions, Euclid Tsakalotos, Greece's chief negotiator, told Reuters.

He dismissed talks of "Grexit" by European partners as a form of pressure in the talks but confirmed Athens did not have money as of now to pay a €1.6bn payment due to the IMF on June 30 without a deal with creditors to unlock frozen aid.

"At the moment we haven't got the money," he said, adding that Athens was already "squeezing every last bit of drop of liquidity" to service debt so far.

"There is no financing, we haven't got access to the markets, we haven't got money that hasn't been paid since the summer of 2014 so obviously we won't be able to have the money to pay that."

Tsakalotos added that "(Negotiations are) a give and take process, not a convergence on the other side's initial position".

"They've moved a bit on fiscal targets but in most areas, you would be hard pressed to put an A4 paper between what they said in February and what they now say in June. So that seems a bit odd."

In particular, he ruled out any further cuts to pensions, a stance repeatedly stressed by Prime Minister Alexis Tsipras, whose radical leftist party stormed to power this year on a pledge to end austerity and raise living standards in Greece.

Long-term reforms could be made to Greece's pensions system, but not cuts to pension payouts, which Athens says would hurt vulnerable people and make its economy and debt problem worse.

"Pension reform is not a red line for us," said Tsakalotos. "It seems to us utterly reasonable that pension cuts should not be on the agenda; pension reform should be on the agenda."

15.48

Ouch - the markets are taking a beating.

15.42

Protests a-go-go! Here are the details if you want to take part, or stage a sympathy rally at home...

15.00

A very interesting interview from Greek newspaper Ekathimerini here with historian Mark Mazower from Columbia University, who arguest that the seeds of the Greek problem were sown in 1980s.

14.56

To Russia with love

Tsipras is due to meet with Russian president Putin on Friday - the day after one of the last possible moments for a deal to be struck.

Bloomberg has suggested that one reason for Tsipras to be courting Putin is that Greece would veto an extension of EU sanctions in exchange for Russian largesse, and to gain leverage over its creditors.

EU sanctions require a unanimous vote by the 28 governments, and opponents will have one more chance to block them before the decision becomes final.

EU officials, led by EU President Donald Tusk, today agreed a preliminary accord to continue the sanctions for six months until the end of January.

14.37

The Stoxx Europe 600 Index slid 0.3pc. Shares earlier fell as much as 0.8 percent after Finance Minister Wolfgang Schaeuble was said to have told lawmakers in Berlin that the German government is making contingency plans for failure to reach a deal with Greece by June 30.

Greece’s ASE Index dropped 1.5pc, erasing gains made earlier in the day. This fall came after PM Alexis Tsipras made comments at a press conference with the Austrian chancellor, saying that without a deal, "we will assume the responsibility to say 'the big no´ to a continuation of the catastrophic policies for Greece."

Bloomberg reports that a TV talk show on Monday hosted a bishop from the Greek Orthodox Church, Metropolitan of Thessaloniki Anthimos, who called on people to pray that the country finds a way out of the stalemate and remains in the euro.

14.11

Reports of a new compromise proposal in next few hours

The Greek website Newsit reports that there might be a new compromise proposal being sent to Athens in the next few hours, as well as a conversation between Juncker and Tsipras tonight.

They say that the new deal will see cuts of €250m in defence spending to cover the fiscal gap this year, which the EU and IMF estimate to be €2bn and Greece believes to be €1.5bn.

In return, Greece would completely cut early retirement schemes and reform social security.

13.45

Protests are planned for this evening across Greece by Syriza’s Far Left Platform.

This Instagram is from the FT's Henry Foy, who is in Athens.

12.56

Things are getting a bit silly in Athens, as Syriza's parliamentary speaker Zoe Konstantopoulou sends back the near-apocalyptic report from the Bank of Greece because it is 'overly politicised' and also 'on a USB stick'.

Meanwhile Tsipras' announcement in the press conference that he will have to give Europe "the big No" if an agreement can't be reached is attracting some lols on Twitter.

12.49

An interesting thought:

Harry de Quetteville wrote last night about the danger of pushing Greece into Russia's arms, and the FT took an interesting look at Greece's military spending.

One detail to be highlighted in particular is that Greece's military budget remains amongst the highest in the EU.

12.32

AFP reports yet another pessimistic voice adding to the chorus about tomorrow's Eurogroup meeting.

German finance minister Wolfgang Schaeuble said he has little hope of Greece deal. This comes after Greek finance minister Varoufakis said that they would not present a proposal at the meeting.

The Guardian reports that Martin Schulz, the president of the European Parliament, has said that Greece could end up out of the EU.

He said: “I think that leaving the euro is also leaving the European Union”, and pointed to the fact that there are no legal avenues for leaving the euro but staying in the EU.

12.24

Mama's boys and girls

Figures from Eurostat show that in 2014 63.5pc of Greek 18-35 year-olds lived in their family home - eclipsed only by Slovakia. Eurostat's data was incomplete, but the figures show the huge difference between Greece and the UK.

12.00

Tsipras and Feymann, the Austrian Chancellor, are having a joint press conference at the moment - you can watch it here (in Greek).

He has ruled out a referendum or fresh elections.

He's also insisting that Greece has presented a proposal that met with creditors' demands.

Meanwhile President of the Eurogroup Jeroen Dijsselbloem is also speaking about the meeting tomorrow, which does not sound promising.

11.45

British government preparing for Grexit scenario

As the FT has reported that the British government is accelerating preparations for a possible Greek exit from the euro zone, as the Chancellor George Osborne said that Grexit would pose "serious economic risks" to the UK.

A spokeswoman said: "You can expect that we are continuing to make sure we have the right plans in place and stepping up preparations given where discussions have got to," adding that the potential impact on business, banks, the financial sector and tourists was being looked at.

The FT reported that among scenarios prepared for were the possibility of British tourists being stranded on Greek islands without money.

The report also said that home secretary Theresa May has previously looked into applying an emergency brake on migration from Greece if financial collapse led to a large movement of people.

11.25

More talk of capital controls from an unnamed EU official.

They say that they were "succcessful" in Cyprus, and that experience shows it is possible the Eurozone can implement them, but that it's "very undesirable".

There's an interesting YouGov poll out today which says that 58 pc of Germans think Greece should leave the Euro - up from 50pc in May. 28pc thought that Greece should remain in, while 14 percent had no opinion.

10.53

Austrian chancellor Werner Faymann is something of a cheerleader for Greece, and is visiting Tsipras today in Athens.

Reuters this morning reported that he said, “I stand on the side of the Greek people who in this difficult position are being proposed more things detrimental to society.”

This chimes with what EC president Jean-Claude Juncker said last night, accusing the Greek government of misleading the Greek people over what exactly is being asked for by creditors.

He said he had “sympathy for the Greek people but not the Greek government”, but that Syriza had been telling people that creditors insisted on raising tax on medicines and electricity.

10.24

Urgent plea from Bank of Greece

The Bank of Greece is very doom and gloom this morning - for good reason, you may argue.

In a new report to the parliament, the central bank pleaded with both sides to strike a deal, describing it as a "historical imperative".

The report said that failure to reach an agreement would lead "initially to a Greek default and ultimately to the country's exit from the euro area and, most likely, from the European Union".

It also said that the economic slowdown is likely to increase in the next quarter: "The deterioration of economic sentiment indicators and financing conditions in the private sector suggest that the slowdown of the economy is likely to accelerate in the second quarter of 2015, putting the economy at risk for a renewed bout of recession."

Failure to reach an agreement would, on the contrary, mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and – most likely – from the European Union.

A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.

All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership. From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.

This is why the Bank of Greece firmly believes that striking an agreement with our partners is a historical imperative that we cannot afford to ignore.

10.13

09.50

Putin' some cash in the bank?

More details about Greek PM Alexis Tsipras meeting on Friday with Putin in St Petersburg.

Greek paper Ekathimerini reports that they will be discussing the construction of “Greek Stream,” an extension to a natural gas pipeline - and there are hints that Moscow might be the source of alternative funding.

^{"Look east" (Reuters)}

The Russian leader is also expected to invite Greece to participate in a new development bank for BRICS countries which also includes Brazil, India, China and South Africa. Greece has already backed the EU’s decision to extend sanctions on Russia over the Ukraine crisis, but this does not seem to have bothered Moscow.

According to sources, Athens is mulling the idea of paying a token amount to the new bank before the debt-wracked country can receive financing for infrastructure projects.

On top of the economic benefits, the move would also tap into the desire of the leftist-led government to find alternative sources of financing.

It is not clear what commitments Greece would have to make in order to borrow from the Shanghai-based bank, whose establishment is seen by observers as a move to challenge the global economic governance dominated by the International Monetary Fund and the World Bank.

09.25

The Stoxx Europe 600 Index slipped 0.3pc this morning, while Greece's ASE Index is up 1.1pc.

Meanwhile the Portuguese Prime Minister Pedro Passos Coelho said his country has cash reserves to weather developments that might come from Greece’s standoff with creditors.

09.11

Other events to look out for today are:

• Press briefing by the president of the Euro Working Group
• T-bills refinancing (€1.6bn)
• European Central Bank reviews Emergency Liquidity Assistance (expected) - this happens on a weekly basis, and is what Greece relies on to keep the money coming out of the banks. It is very unlikely that the ECB will cut off this funding, as ECB president Mario Draghi does not want to make a move that would appear so political.

Another thing to look out for today are bonds - yesterday, Spanish 10-year bond yields climbed to their highest level since August. Italy’s were the highest since October while Ireland and Portugal are also seeing the steepest borrowing costs this year. This rise suggests that they are riskier, and indicate a creeping contagion from the Greek crisis into other European makets.

Mauricio Vargas, a Frankfurt-based economist at Union Investment, told Bloomberg: “We are seeing contagion from Greece for the first time since 2012. That’s a matter of big concern to me because it’s a sign of systemic risk that markets have been ignoring.”

08.46

Tomorrow's Eurogroup meeting is a big deal - and it is especially notable the yesterday Greek finance minister Varoufakis said they would not present any new proposals.

Analysis by BNP Paribas underlines the importance of it - and why it's different.

Previous self-imposed deadlines have passed with no great effect. This time is different, however. Greece’s already extended bailout programme expires in two weeks, so any potential agreement would have to be signed off by various national European parliaments by then.

Failure to strike a deal would leave Greece with insufficient funds to make a €1.6bn payment due to the IMF in around two weeks’ time. Default would probably force the ECB to halt any financing to Greek banks via its Emergency Liquidity Assistance programme, requiring the imposition of capital controls in Greece and limits on domestic bank withdrawals.

08.16

Good morning

Yesterday, Greek prime minister Alexis Tsipras gave a firebrand speech to Syriza MPs, accusing the IMF of acting "criminally" in the debt crisis. There was a lof ot strong language: the Finnish finance minister said that the Greeks need a "miracle" to make a deal.

The markets reacted strongly to this uncertainty and rhetoric: the Athens Stock Exchange Index fell 4.8 percent on Tuesday. Greek bank stocks fell 8.9 percent. There were also signs of contagion from the Greek crisis in Spanish and Italian bonds.

US treasury secretary Jack Lew phoned Tsipras last night calling for a “pragmatic compromise”, while the sympathetic Austrian finance minister Werner Faymann is in Athens today to talk with Tsipras.

We also wake up to news that Greek tax revenue has a shortfall of €1.7bn from January-May.

Greece appointed economics professor Michalis Psalidopoulos as its new representative at the International Monetary Fund (IMF) after the previous nominee was pushed out due to a backlash because her views clashed with Syriza's programme.

Yanis Varoufakis, Greece's finance minister, yesterday told German newspaper Bild that they would not be presenting any proposals at the crucial eurogroup meeting tomorrow.

It seems that Yaroufakis has been busy with a book - and it's out next month. Surely a very busy man... He's meeting with the Secretary-General of the OECD this afternoon.