George Osborne: UK must 'prepare for the worst' as Greece teeters on the edge of euro exit

Chancellor says Treasury officials are preparing contingency plans in the event of a Grexit as he meets EU finance ministers in last-ditch talks

George Osborne warns of the effects of a Grexit to the UK economy as he arrives in Luxembourg for talks with EU finance ministers (Sky News)

Britain must be “prepared for the worst” over the prospect of Greece leaving the euro, George Osborne has warned after the latest talks between eurozone finance ministers broke down.

The Chancellor said Treasury officials would complete contingency plans to protect the UK economy from the effects of a ‘Grexit’, which could also lead to Greece leaving the European Union.

The debt-ridden country must reach an agreement with the International Monetary Fund by the end of June or face defaulting on a £1.1 billion loan repayment. Greece’s creditors – the European Commission, IMF and the ECB, are unwilling to release further bailout funds until it agrees to public sector reforms.

The Greek Prime Minister Alexis Tsipras is still confident of reaching a deal with creditors before the next deadline of the end of June (Reuters)

Speaking as he arrived at a meeting of EU-wide finance ministers, Mr Osborne said: "We've entered the 11th hour of this Greek crisis and we urge the Greek government to do a deal before it's too late. We hope for the best, but we now must be prepared for the worst.

“In the United Kingdom we’ve taken the measures to increase our economic security so we can deal with risks like this from abroad and clearly we must go on and complete that plan.”

Today’s talks come after last night’s make-or-break meeting of eurozone finance ministers in Luxembourg ended without agreement amid reports in Greece of £1.4bn being withdrawn from bank accounts by frightened savers in the past three days.

However the Greek Prime Minister, Alexis Tsipras, pointed to the emergency meeting of leaders from Eurozone nations called for Monday as a sign that a solution to his country’s debt crisis could be reached.

“The leaders’ summit on Monday is a positive development on the road toward a deal. All those who are betting on crisis and terror scenarios will be proven wrong.

"There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro."

His comments come as he visits St Petersburg Russia, where he will meet President Vladimir Putin at an economic forum. News of the meeting has fuelled speculation of an Atehns-Moscow alliance.

However it is being seen by critics as an audacious attempt by Mr Tsipras to pressure its creditors into watering down austerity demands as the country teeters on the edge of default and bankruptcy.