Greek referendum result: what happens next?

Jill Treanor Monday 6 July 2015

A flurry of Eurozone meetings are set to go ahead in Athens, Brussels, Paris and Frankfurt, but Greek exit contingency plans will also be discussed in the UK

“No” supporters wave Greek national flags on the main Constitution (Syntagma) square in Athens. Photograph: Yannis Behrakis/Reuters

What’s next for the Greek banks?

The Greek finance minister, Yanis Varoufakis, will hold an emergency meeting with the bosses of the local banks on Sunday night. He has said he is on a “war footing”. The governor of the central bank, the Bank of Greece, Yannis Stournaras, is also likely to be summoned amid fears that Greece’s banks are close to being completely depleted of cash.

Banks are reported to have only some €500m left in cash – equal to just €45 (£32) per head of the 11 million-strong population.

The stakes are high: before the result of the referendum, Martin Schulz, the president of the European parliament, told the Daily Telegraph: “Without new money, salaries won’t be paid, the health system will stop functioning, the power network and public transport will break down, and they won’t be able to import vital goods because nobody can pay.”

Where does this leave the bailout negotiations?

Greece’s negotiating team was set to fly to Brussels where they will attempt to get Eurozone leaders back to the negotiating table.

Meanwhile, Angela Merkel, the German premier, is flying to Paris on Monday evening to meet her French counterpart, François Hollande, in a move that suggests no immediate deal.

Will the European Central Bank cut off Greece’s liquidity?

The European Central Bank holds the key. Led by Mario Draghi, it is scheduled to meet on Monday morning to decide whether to extend its “emergency liquidity assistance” (ELA) to Greek banks. So far, it has pledged €89bn and it was the ECB’s decision last week not to offer more that led to capital controls being put in place. Greece will ask for help again.

If the ELA was suspended altogether it would ultimately propel Greece towards a euro exit. Analysts at Société Générale said: “The Greek government has already clearly indicated that it is not actively seeking to take the country out of the euro. We have long argued that the day the ECB cuts off ELA is de facto the day that Greece would leave the euro”. But the ECB seems unlikely to want to do that, says SocGen.

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How will the markets react?

Investors get to react to the shock referendum result once markets start trading in Asia at 2.30am London time on Monday.

Barclays had teams of foreign exchange traders at their desks from 5pm on Sunday night in preparation for any moves in the currency markets. The focus will be on the euro – which has already been under pressure – but also on government bonds and stock markets. Goldman Sachs has predicted that there could be an initial 10% wiped off the European shares.

Is Greece more likely to leave the euro?

While Tspiras has said a no vote would give him a better negotiating hand with his creditors, analysts at Deutsche Bank are sceptical. According to its analysis, one potential scenario is that Tsipras’s Syriza government is replaced with one of national unity to enable a new deal to be made with creditors. The Deutsche analysts also think it possible that a no vote will result in a Grexit. “We see the probability of Grexit increasing the larger the margin of victory of the no vote,” the Deutsche analysts said.

What about the UK?

In the UK, George Osborne, the chancellor, will hold crisis meetings with the prime minister, David Cameron, and the Bank of England governor, Mark Carney. Carney had already been attending meetings of Cobra – behind-the-scenes talks at the highest level of government – as the Greece crisis was deepening last week and said that contingency plans to deal with repercussions if Greece exits the euro are being put in place.

When is the next deadline?

Greece missed a payment to the International Monetary Fund last week and the clock will tick down to 20 July when Greece must repay €3.5bn to the ECB – the final deadline, according to Bank of America Merrill Lynch. If they missed that, “It would then be very difficult to repair the relationship between Athens and the Europeans, at least under the current political configuration in Greece.”

Greek referendum result: what happens next? | Business | The Guardian