Germany, France and Italy warn Greek people referendum ‘no’ vote will spark exit from currency union

Eurozone leaders ratcheted up the pressure on embattled Greek leader Alexis Tsipras yesterday by warning Greek voters that Sunday’s crunch bailout referendum was a vote on the return of the drachma. 

 

Amid a day of high drama in Greece, the Eurozone’s top three economies, Germany, France and Italy, raised the stakes by urging voters in stark terms to accept a bailout proposal from the country’s creditors or face an exit from the single currency. 

 

Tsipras is facing an onslaught from European leaders over his decision to call a ballot on whether the country should accept the latest set of reforms proposed by Brussels in return for cash that would help it avoid bankruptcy.

 

Last night he urged Greeks to vote no, asking them to “reject it with all our strength”. The country is set to miss a €1.6bn (£1.1bn) debt repayment today, with a further €3.5bn payment due next month also under threat. 

 

Berenberg Bank chief economist Holger Schmieding said Eurozone leaders were right to be angry with Tsipras for failing to take a neutral stance on the referendum.

 

“Tsipras could have said ‘sorry we can’t get this through our left wing [a rebellious group of MPs], but we can get this through the Greek population so we need a referendum’. Everyone in Europe would have understood that,” Schmieding told City PM. “But now to actually bow to the left wing and to campaign against the deal is impossible for the rest of Europe.”

 

Vicky Pryce, chief economic adviser at the Centre for Economics and Business Research, added that Tsipras did not need a mandate to agree a bailout and said the Greeks would have been prepared to accept new proposals to end their economic turmoil.

 

“This referendum is really about whether to stay in the euro or not. And people may not have quite realised that,” she told City PM last night.

 

Eurozone leaders fell into line yesterday to put on a united front.

 

Italian leader Matteo Renzi tweeted “Greek referendum won’t be a derby EU Commission vs Tsipras, but euro vs drachma. This is the choice”, while French President Francois Hollande said: “What is at stake is whether or not Greeks want to stay in the Eurozone or take the risk of leaving.”

 

Meanwhile, German Chancellor Angela Merkel said “the euro will fail” if Greece fails to agree to the terms. 

 

Laying bare the strength of feeling at the heart of the Eurozone, European Commission president Jean-Claude Juncker said he felt “betrayed” by Greece. 

 

“After all my efforts and the efforts made by the commission. I feel a little betrayed because due consideration is not being given to my personal efforts and the efforts of others,” he said. “Egotism, tactical games, populist games, took precedence over other aspects.” Greek banks and the Athens stock market were closed yesterday after capital controls began and will  stay shut today, with queues expected at cash machines as Greeks get their daily €60 withdrawal allowance.