Greece To Hold Referendum On Bailout Extension

Alexis Tsipras has hit out at controversial EU bailout extension deal as he announced plans for a referendum on the proposals.

The Greek prime minister said eurozone finance ministers had presented Greece with an "ultimatum that is against the values of Europe" as he called the vote for 5 July.

Creditors have offered Greece a five-month, €12bn extension of the country’s current bailout programme, on the condition that a series of reforms are implemented.

German Chancellor Angela Merkel urged Greece to accept the deal, describing it as "extraordinarily generous".

In a televised address, Mr Tsipras said the Greek government had been asked to accept "unbearable burdens" that would hit the job market and force tax hikes on workers.

He said he was obliged to respond based on the sovereign will of the Greek people, who would be asked to accept or reject the offer in the referendum question in just over a week.

He urged Greek voters to send a "sound response" to the world and sought to reassure them that whatever the outcome, "Greece will stay part of Europe".

Mr Tsipras said he would ask for Greece's bailout terms to be extended for a few days to avoid a looming debt default ahead of the referendum.

Greece had put forward plans to make €8bn in savings through VAT increases, taxes on the wealthy and a cut in defence spending.

But the IMF claimed the proposals were insufficient and said further cuts to salaries and pensions were needed in exchange for the €7.2bn Greece badly needs to keep its economy afloat.

Speaking earlier in Brussels, Mr Tsipras slammed his country's creditors, telling reporters: "The European Union founding principles were democracy, solidarity, equality and mutual respect. It was not based on blackmail and ultimatums."

Greek ministers Nikos Pappas and Panayiotis Lafazanis both said they expected Greece to vote "no" to the terms for the referendum, which will be discussed in the Greek parliament on Saturday.

The announcement leaves a planned Saturday meeting of eurozone finance ministers - which had been presented as D-Day for Greece - clouded in uncertainty.

Sky News Economics Editor Ed Conway said: "No-one knows quite how this is going to be reflected in the debates we're still going to have.

"There's still a Eurogroup meeting happening - no-one's quite sure what's going to come out of that, no-one's quite sure what the question's going to be.

"What we do know is that this is likely to provoke even more chaos in terms of the politics and the economics of Greece in the coming week."

The Eurogroup is likely to discuss capital controls for Greece as an alternative to more bailout aid at the Saturday meeting, officials told the Wall Street Journal.