Osborne: UK Must 'Prepare For Worst' Over Greece

George Osborne has said the UK needs to prepare for the worst and protect itself after Greece defaulted on a major debt repayment.

Greece became the first developed country to miss a payment to the International Monetary Fund (IMF) on Tuesday night but hopes of progress in creditor negotiations have since been raised .

Before that development came to light, Mr Osborne said the actions of Greece's government had added to the crisis faced by its country but what was most important was ensuring financial stability.

He said: "The failure of the Greek government to make its scheduled payments to the International Monetary Fund, and the expiry of Greece's financial assistance programme, have served only to add to the developing crisis in that country.

"It is vital now that the current uncertainty is resolved, whatever the Greek people decide, to ensure economic and financial stability across Europe.

"Britain's attitude to this developing crisis is clear: we hope for the best; but we prepare for the worst, and we stand ready to do whatever is necessary to protect our economic security at this uncertain time."

Ahead of the vote, most of the banks remained closed but there were scuffles as around a thousand branches opened on Wednesday to allow the elderly to receive pensions payments.

Everyone else was limited to withdrawing a maximum of €60 (£42) a day from cash machines.

The European Union is to decide on Wednesday whether it will grant Greece a last-minute bailout package to avoid pushing it further towards an exit from the eurozone.

On Tuesday it failed to make a €1.5bn (£1.1bn) payment to the IMF - the first country to miss a payment since Zimbabwe in 2001.

Greek Prime Minister Alexis Tsipras has called a referendum for Sunday in which the country will be able to vote on a package of austerity measures aimed at keeping his country in the single currency.

Ahead of that vote, Mr Tsipras failed in his bid on Tuesday night to get an extension of Greece's existing bailout agreement from eurozone finance ministers.

Talks were due to resume to discuss a new two-year financial aid plan proposed by Greece, which includes a request for debt restructuring.

But many countries in the eurozone are understood to have lost patience with the Greek government's stance and are requiring a major shift before agreeing to a new deal.

Ratings agencies cut their ratings on Greece's debt, predicting it will return to recession this year.

Thousands of people rallied in Athens before the IMF deadline passed in support of a deal with international creditors.

A No vote in the referendum could see Greece leave the eurozone.

A Yes vote, against the urging of the Greek Prime Minister, could force Mr Tsipras and members of his government to resign.

The latest opinion polls say that a majority of Greeks would vote 'No'.