LONDON: Greece was on the brink of economic meltdown last night (Monday night) as Germany looked poised to push the country out of the eurozone.
With Greece set to default on a euros 1.5billion (pounds 1.1billion) debt repayment, senior German politicians warned that "enough is enough".
London's FTSE 100 slipped 1.1 per cent to a three-month low as investors reacted to Greece's failure to reach a deal with its creditors. Global oil prices also fell after the Greek debt negotiations collapsed after just 45 minutes on Sunday, amid fears that Athens is now heading towards financial catastrophe.
George Osborne, Britain's Chancellor of the Exchequer, will later this week chair an emergency meeting as ministers seek to protect Britain's economy from a potential Greek exit from the single currency.
The Prime Minister's official spokeswoman urged eurozone countries "to find a solution" to the crisis at a summit to be held this week.
Senior Government officials have for months been "war gaming" a British response to a Greek default following fears that it could derail the economic recovery.
Alexis Tsipras, the Greek prime minister, was accused yesterday of attempting to "swindle the whole world" following a series of demands made in recent days.
Despite condemnation from European leaders following the breakup of the talks, Mr Tsipras, the leader of the Left-wing Syriza party, said it was up to international creditors to "turn to realism".
"We will patiently wait until creditors turn to realism," he said. "We have no right to bury the European democracy in the land where it was born."
He claimed that the talks collapsed because European creditors want to slash Greek pensions and workers' wages. Mr Tsipras' claims were immediately rejected by the European Commission.
Guenther Oettinger, Germany's EU Commissioner and a senior member of Angela Merkel's Christian Democrats, said that Europe should brace itself for a "state of emergency" in Greece from July 1 if Athens does not reach an agreement with its creditors.
He said: "We should work out an emergency plan because Greece would fall into a state of emergency.
"I think that the Commission needs to work out a plan that could avert a worsening of the situation in the event that Greece leaves the euro zone, in the event of a bankruptcy."
Other senior figures in Mrs Merkel's party queued up to criticise the Greek leadership. Volker Bouffier, the deputy party leader, condemned Mr Tsipras' demands as "completely unreasonable".
And Julia Kloeckner, a member of the party executive, said the Greek leader was "overplaying his hand".
Sigmar Gabriel, the head of Germany's centre-left Social Democrats, who has been more sympathetic to the Greek position, said that time is running out for Mr Tsipras' government. "Everywhere in Europe, the sentiment is growing that enough is enough," he said.
Mario Draghi, the president of the European Central Bank, refused to say what the consequences will be if Greece misses any debt repayments. However, he said: "A default is unchartered waters. We have all the tools to manage the situation as best as we have done in other situations, perhaps less dramatic.
"The consequences in medium to long term to the union is not something we are in a position to forsee."
Shares in Greece tumbled, with some bank stocks falling by more than 10 per cent. Eurozone finance ministers will meet on Thursday and attempt to agree a solution to the crisis.
Mr Tsipras has been locked in negotiations with Greece's creditors - the European Union and the International Monetary Fund - for five months in the hopes of securing the release of euros 7.2 billion in rescue funds.
