The Department for Work and Pensions and public service pension administrators will attempt to contact people that draw a British state or public sector pension from a Greek bank account, the chancellor revealed.
There are 40,000 British residents in Greece, including 6,000 receiving payments from the Department of Work and Pensions and around 300 receiving public sector pension payments.
Speaking to the House of Commons, chancellor George Osborne said these people will be helped to switch these payments to a non-Greek bank account if they wish, despite the chancellor emphasising that international payments into Greece are exempt from the restrictions that the Greek authorities have placed on the banking system.
On Friday (26 June), the Greek prime minister announced that there will be a referendum on 5 July on the terms of that programme extension, and that he will be recommending that the Greek people vote “no”.
Greek banks were forced to close after bailout negotiations with foreign creditors broke down over the weekend.
The country’s financial stability council - made up of banks, regulators and government - imposed capital controls on Sunday (28 June) night after the European Central Bank said it would freeze the amount of emergency loans it supplied. Greece’s financial assistance programme is due to expire today (30 June).
Mr Osborne said: “Whether or not Greece should ever have joined the euro, it is now part of that single currency, and an exit will be traumatic.
“It was the Greek government’s decision to hold a referendum which was the immediate trigger for the events over the weekend and the bank closures today.
“That remorseless logic of integration is one of the reasons we didn’t join the euro and we don’t want to in the future.
“Second, there is the impact of the current events on the stability of the financial system, in the UK and across Europe. Related to that is the position of the Greek banks here in the UK.
“This Greek crisis has, in one form or another, been with us for five years. It has been one of the biggest external economic risks to the British economy.
“And the situation today shows that these risks remain. I don’t think anyone should underestimate the impact that a Greek exit from the euro would have on the European economy – and the knock-on effects on us.
“That is why I have consistently argued that the best way to protect ourselves from these risks is to get our own house in order.”
Mr Osborne said the markets had anticipated some of the risks of a Greek exit from the eurozone and private sector exposures to Greek banks and the Greek economy were far less than they were, say, three years ago.
Stock prices on European exchanges have fallen by between 2 and 5 per cent and Greek bond yields have increased by around 400 basis points to over 14 per cent.
emma.hughes@ft.com
