Osborne appeals to Greeks over financial risk

George Osborne greets his Greek counterpart Yanis Varoufakis in Downing Street yesterday. Picture: PA

In Downing Street yesterday, the Chancellor warned Yanis Varoufakis that the stand-off with his country’s eurozone creditors risked destabilising the entire global economy.

Mr Varoufakis is engaged on a whistlestop tour of European capitals in a bid to win support for the new Syriza government attempt to re-negotiate the terms of the country’s €240 billion (£179bn) international bailout.

While he was urged by Mr Osborne to choose “competence over chaos”, the Chancellor also made clear that the eurozone countries needed to do more to encourage growth.

In a statement following their meeting, Mr Osborne warned that a renewed crisis in the eurozone would hit Britain’s economic recovery.

“It’s clear that the stand-off between Greece and the eurozone is fast becoming the biggest risk to the global economy, and it’s a rising threat to our economy at home. In Europe as in Britain now is the time to choose competence over chaos,” he said.

“I urged the Greek finance minister to act responsibly, but it’s also important that the eurozone has a better plan for jobs and growth.

“We have that plan in Britain and in these uncertain times, now is not the time to abandon that plan.”

Mr Varoufakis, an economics professor who studied at Essex University, arrived for the meeting sporting a blue, open-necked shirt, in contrast to Mr Osborne’s traditional suit, collar and tie.

While he received support for his call for a renegotiation from the French during talks on Sunday in Paris, he has yet to convince Greece’s biggest creditor – Germany.

Chancellor Angela Merkel has made clear that she will not allow Greece’s debts to be cancelled, insisting substantial cuts have already been made.

Downing Street confirmed that Britain still believed that Athens should continue to honour its international commitments.

“The position hasn’t changed about expecting all countries to fulfil their international obligations,” the Prime Minister’s official spokesman said.

Greece’s new prime minister Alexis Tsipras struck a conciliatory tone yesterday, dismissing what he called scaremongering over his government’s position on bailout negotiations.

He said that while the Greek people expect him to carry out tough negotiations with eurozone creditors, that would happen “within a European framework”.

Mr Tsipras said he was surprised many “powerful European forces” back his government’s call to focus policies on economic growth and not just debt reduction.

“Europe needs to take a breath, certainly through mutual understanding and common steps,” he said. “But there’s no need to further constrict those breaths that people and economies need in order to move toward growth.”