Germany No Longer Ruling Out Greek Default, Bild Reports

Germany’s government is no longer ruling out a Greek default after Prime Minister Alexis Tsipras during talks on Thursday didn’t concede any ground on European Union reform proposals, Bild reported, citing unidentified people familiar with the government’s position.

Chancellor Angela Merkel’s advisers are in discussion on how to deal with a default, including capital controls for Greek banking clients and a debt cut, the German newspaper reported. Merkel is also responding to pressure from her Christian Democratic bloc as a growing number of lawmakers object to further financial aid for Greece, according to Bild.

The preparations follow International Monetary Fund negotiators leaving Brussels after failing to make progress on a debt deal that would help Greece avoid default and cement its position within the euro area.

Talks with Merkel and France’s President Francois Hollande concluded with Tsipras rejecting proposals such as a higher value-added tax, Bild said. European Union President Donald Tusk Thursday told Tsipras to stop maneuvering and decide whether to accept the conditions on financial aid.

Tusk abandoned his neutral position as a broker of EU compromises to signal Greece’s creditors are preparing to hand Tsipras an ultimatum. The creditors have grown exasperated with the Greek leader’s refusal to bow to their demands, risking a default and ultimately an exit from the currency bloc, with potential consequences beyond the country’s borders.

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