The decision of the Syriza-led coalition government to call a referendum on the proposals from the Eurogroup of euro-area finance ministers for structural reforms to support further aid transfers precipitated a run on commercial banks, causing them to be closed for six working days, along with the imposition of capital controls. Greece's bailout programme, already extended by four months, expires tomorrow. Financial markets fell in morning European trade as hopes of a last-minute compromise were seen to have diminished.
Capital controls could be extended for months causing existing businesses operational difficulties and disrupting investment in new ones.
Recession would postpone the return to growth essential for Greece to begin paying down its mountainous debt (about 180% of GDP).
The referendum stretches relations with the euro-area to near breaking-point but there is no mechanism for leaving without leaving the EU.
