Tsipras to present new proposals at emergency EU summit

Greece will present fresh proposals for a new bailout deal at an emergency summit in Brussels on Tuesday after European leaders warned Athens time was running out in the effort to keep it from crashing out of the euro zone.

As efforts intensified to strike a deal before Greek banks face running out of money later this week, German chancellor Angela Merkel and French president François Hollande told Greece's government the door to negotiations remained open but urged it to make "quick" and "precise" proposals on a cash-for-reforms deal.

Speaking alongside her French counterpart in Paris, Dr Merkel said the conditions for talks on a bailout were not yet in place and “time is running out”.

Greece's economy is grinding to a halt. Its banks are to remain closed at least until Thursday, but they could run dry within days without increased emergency funding from the European Central Bank.

Just after Dr Merkel and Mr Hollande met, the Frankfurt bank maintained its lifeline to Greek lenders at the current level – the equivalent of a drip-feed.

It also toughened the terms of that lifeline to reflect the dire economic situation, raising the discount – or haircuts – on the collateral Greek banks are swapping for their funding.

The move puts added pressure on Greek prime minister Alexis Tsipras, whose domestic standing has been boosted by the resounding victory of the No side in the referendum.

One of his first moves on Monday was to replace his outspoken, confrontational finance minister Yanis Varoufakis with a trusted ally, Euclid Tsakalotos.

The choice of Mr Tsakalotos, a soft-spoken academic economist who has been closely involved in the talks over recent months, was seen in Athens as a pre-emptive concession aimed at improving the Greek negotiators’ fraught relationships with their European counterparts and ease the path to a compromise.

Resignation statement

In a resignation statement,

Mr Varoufakis

said Greece’s “assorted partners” had forced him out.

Mr Tsipras rallied opposition leaders to his side. In an unprecedented joint statement after a day of talks, the main opposition groups joined the ruling Syriza party in backing efforts to reach a deal with creditors.

They urged immediate steps to reopen banks and signalled that any deal must ease Greece's huge debt – a point Germany and other states have firmly resisted putting on the agenda.

After a phone call with Dr Merkel, Mr Tsipras confirmed he would bring new proposals to a euro zone leaders’ meeting on Tuesday, but gave no hint of whether he would be willing to move towards lenders’ key demands on tax, pensions and labour market reforms.