Markets across Europe have fallen heavily following the news that Greece will hold a referendum on the latest bailout plan. Eurozone leaders had agreed to write off 50% of Greek debt but the deal may now not go ahead. A no vote will probably lead to a disorderly Greek default and Greece leaving the Euro. That could lead to severe financial contagion across Europe. Worryingly opinion polls in Greece suggest a No vote is probable. The vote is unlikely to take place until January potentially creating months of uncertainty for the markets. That uncertainty could damage confidence throughout the world.

The FTSE is currently down 3.5% while the Dax was down almost 6%. The French bank Societe Generale was down 17%. Credit Agricole was down 13%.

A confidence vote on the Greek government is due to take place on Friday. Many in Greece are now calling for early elections.