Greek PM Says Country Will Accept Bailout

Prime Minister Alexis Tsipras has urged Greeks to vote "no" in Sunday's referendum after saying he would accept a bailout offer with several conditions.

In a televised address to the nation, Mr Tsipras said a "no" vote would not push Greece out of the eurozone, but rather win a better bailout deal.

He said: "Those who say a no vote will bring Greece out of the EU are lying.

"No means powerful pressure for a financial agreement that will give a solution to the debt... an agreement that is socially just."

Mr Tsipras said Europe must stop acting in an "undemocratic way" and sought to reassure Greeks that their bank deposits were safe.

The speech came after he wrote to creditors saying that Greece will accept terms by the European Commission on Sunday but with a number of amendments.

Greece wants to keep a reduced level of VAT for its islands, reduce the size of cuts to its military budget and delay the phasing out of a supplement for some retired people.

The move comes after Mr Tsipras previously rejected conditions that the creditors wanted Greece to meet in exchange for further bailouts.

Optimism that his offer to agree to a deal would result in a long-term solution was limited by German finance minister Wolfgang Schaeuble, who said it had brought no further clarity.

He said that, despite the letter, there was "no basis" for serious negotiations with Athens at the moment and no deal would be possible until after the referendum.

"First (Other OTC: FSTC - news) of all Greece must clarify its position on what it wants, and then we will have to talk about it, under conditions that are now far more difficult," Mr Schaeuble said in Berlin.

Eurozone finance ministers are due to look at Mr Tsipras' latest proposals at 5.30pm on Wednesday.

Another unnamed eurozone official told Reuters: "There are still a lot of loose ends. I don't think the Eurogroup still believes those promises just like that."

Sky (Other OTC: BSYBF - news) 's Robert Nisbet says the Greek Parliament has been closed ahead of the referendum on Sunday but may reopen if a bailout deal can be reached.

He said there is confusion over whether the latest proposal relates to the bailout deal that has already expired or a deal relating to a later tranche of funds due to become available shortly.

If a deal is to be reached, Mr Tsipras wants to keep VAT in the Greek islands at 16%, compared to the level on the mainland at 23%.

The discount is in place to account for the added cost to residents of goods being shipped off shore, but could increase costs for tourists if abolished.

He also wants the EKAS scheme phased out more slowly. Under Mr Tsipras' plan, the variable supplement that gets paid to pensioners to bring their monthly income up to €700, would continue to be paid to the richest 20% for longer.

The original deal asked for EKAS to be phased out for the richest fifth immediately, with it being phased out for all pensioners by 2019.

The letter also asked for a delay to an extension of individual business income tax, and a smaller cut in the military budget.

Financial markets reacted positively to the developments initially, with all the major stock markets regaining some of the ground lost this week.

The euro climbed against sterling, but investors remained cautious.

At a news conference to outline the Bank of England's latest Financial Stability Report, its governor Mark Carney warned the outlook for UK financial stability had "worsened" because of the crisis in Greece.