By Jason Douglas And Nicholas Winning
LONDON--U.K. Treasury chief George Osborne said on Monday that
Britain would respect the outcome of the Greece's vote but warned
the situation could deteriorate rapidly if an agreement isn't
reached quickly.
He also said the U.K. has extended extra assistance to British
holidaymakers in Greece as well as Britons who live there following
Greece's vote on Sunday on fresh bailout aid.
In the referendum, Greeks voted overwhelmingly against their
international creditors' conditions for further bailout aid, in a
result that risks deepening the rift between Greece and the rest of
Europe and pushing the country closer to bankruptcy and a possible
exit from the euro.
The U.K. isn't a member of the single currency and has few
direct financial links to Greece, but officials are concerned the
crisis there could spread again to other eurozone nations and hurt
the broader European economy.
Mr. Osborne told parliament Monday that the risks from the Greek
crisis are growing.
"We are urging all sides to have a final go at trying to reach
an agreement that defuses the crisis," Mr. Osborne said. He added
if there is no signal from Monday's Franco-German summit or
Tuesday's gathering of eurozone leaders, "we can expect the
financial situation in Greece to deteriorate rapidly."
"It is right that we remain vigilant and monitor the situation
carefully, " Mr. Osborne said, adding "we will do whatever is
necessary to protect the U.K.'s economic security at this
time."
British Prime Minister David Cameron met senior officials
including Mr. Osborne and Bank of England Governor Mark Carney
earlier Monday to assess the outcome of Greece's referendum and
consider whether they needed to respond.
One area of immediate concern for the U.K. government is British
holidaymakers and the roughly 40,000 U.K. citizens who live in
Greece.
The U.K. Foreign Office has warned Britons to be prepared for
travel disruptions and problems withdrawing cash, after the
government in Athens imposed capital controls that restrict how
much cash is available to EUR60 ($66) a day for withdrawals using
cards issued by Greek banks. Foreigners should be able to withdraw
more, as long as cash is available. Greek banks remain closed.
On average, some 150,000 British tourists a week are in Greece
in July in a normal year, according to government estimates. The
Foreign Office advised travelers to take sufficient quantities of
euros in cash to cover the duration of their stay, emergencies and
any unforeseen circumstances.
Mr. Osborne told lawmakers the U.K. has added extra consular
staff in popular holiday destinations in Greece, including the
islands of Crete, Corfu and Rhodes, to help with any
emergencies.
Officials have also offered advice to some 2,000 British
retirees living in Greece about switching their pension payments to
non-Greek bank accounts if they are worried they may lose access to
their money, he said.
Mr. Osborne confirmed that the Treasury has drawn up plans with
U.K. tax authorities to allow British companies facing payment
problems from Greek customers to delay paying any taxes that may
fall due.
Separately, the U.K.'s export finance agency, which helps firms
get loans to export goods and services, said Monday it would no
longer process applications to support exports to Greece.
The Bank of England has increased scrutiny of Greek bank
branches in the U.K. The BOE said in its twice-yearly Financial
Stability Report on Wednesday that the outlook for financial
stability in the U.K. has deteriorated in recent days as the Greek
crisis intensified.
BOE data show British banks' direct exposure to Greece is
minimal: they are owed some $3.2 billion by Greek companies, banks
and the public sector, a sum equivalent to less than 1% of their
equity, according to the central bank.
Officials are concerned, however, that the crisis could spread
to other parts of the eurozone where banks have more at stake,
although Mr. Carney acknowledged Wednesday that the eurozone's
defenses against such contagion are much stronger now than when the
crisis first hit in 2010 and flared up again two years later.
The European Central Bank in March began buying eurozone
government bonds to spur growth and stoke inflation in the
19-nation currency union. This move should help to prevent a repeat
of the surge in borrowing costs experienced by other nations. The
bloc's banks are also in better fiscal health.
Write to Jason Douglas at jason.douglas@wsj.com and Nicholas
Winning at nick.winning@wsj.com