Greek debt crisis: 85% chance Greece will leave the EU as its government imposes capital controls and closes banks, economist warns

As tensions of Greece's position escalate an economist has said that he believes 'Grexit' is likely

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The Independent Online

Concerns over Greece’s continued membership of the European Union and risk of default after an economist has predicted that there was an 85 per cent chance of a Greek exit, “in the next few weeks”.

Mohamed El-Erian, the former CEO of PIMCO one of the world’s largest bond investors, has said that he considers “Grexit” as an accident waiting to happen.

Mr El-Erian said: “If you were to put a gun to my head and say ‘give me the probability that Greece stays in the eurozone in the next few weeks’ I would tell you it was about 15 per cent,” Bloomberg reported.

“There is about an 85 per cent probability that Greece will be forced to leave the eurozone, because it is unable to stay,” he added.

In the interview, Mr El-Erian said that the potential exit of Greece from the EU was “an accident waiting to happen,” an eventuality for which there was no “Plan B”.

He told Bloomberg that logically, there would be a massive economic contraction and social unrest would make continued membership extremely difficult.

The development comes after Greece imposed capital controls on its citizens, restricting them to withdrawing €60 a day, and closing the banks for six business days. The Athens stock exchange was also closed today.

On 5 July, the Greek population will vote in a referendum on whether it wishes to accept the bailout conditions that Greece’s European creditors have proposed in order to keep the country from default.

Alexis Tsipras, the Greek prime minister, has said that he does not believe the terms of the bailout are good enough and will therefore campaign on the side of a “No” vote in the referendum, although his finance minister, Yanis Varoufakis, has said on his personal blog that he believes it likely that the terms will be accepted.

The Prime Minister, David Cameron, was today pressed on Britain’s position should Greece leave the EU and whether the latter’s departure increased the likelihood of successfully renegotiating the British position in the union.

He said: “[The European Union] has to be flexible enough to work for those members that are eurozone members but flexible enough to succeed for countries like Britain,” the BBC reported.

Mr Cameron also said that the British government was providing advice for any tourists destined for Greece, providing instruction as to what currency to take when travelling to the country.

A Greek official told The Independent: "Restricting the movement of capital does not affect in any way those who wish to make transactions or ATM withdrawals using debit or credit cards issued abroad.

"It should be also noted that there is ample availability of both fuel and all products and services that ensure a smooth and fun stay for the visitors in every city, region and the islands.

"We do not know the mood of the Greek people and that is why we need the referendum. If we new that, we would not need to do it."