Why this week is vital for Greece and the eurozone

Athens and EU finance ministers remain at loggerheads but if an agreement is not reached by this weekend there are many long-term consequences

The Athens government has been in debt talks with its international creditors for months in a bid to get them to release a last chunk of held-up bailout funds and avert bankruptcy. It needs the money to meet debt repayments and without it there is a fear that Greece will end up defaulting, which could precipitate its exit from the eurozone.

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The fact is, unless some significant concessions are made on either side, a default is now more or less inevitable, and even if a plan were agreed that was agreeable to the creditors, it is unlikely that the Greek government would be able to get it through their parliament.

Given that Germany won't countenance anything like debt relief at this point, we are likely set to see a continuation of this game of political cat and mouse through this week's Eurogroup finance ministers' meeting on Thursday, and beyond to the end of the month.

Our economists' base-case scenario [60% probability] remains that a last-minute deal will be struck, leading to a semi-stable scenario, but most likely not before the EU summit on 25-26 June.

Mr Tsipras had better get ready to blink if he wants to get a single additional euro from Germany or, indeed, any of the other member countries. Of course, he too may have given up on reaching an agreement and is keeping up appearances simply to impress Greek voters. Either way, he is no longer in last-chance saloon but no-chance saloon.

Even in the event of default, Grexit should be avoided. It is not in anyone's interests for Greece to leave the eurozone. For Greece, it would mean widespread bankruptcies. For the remaining eurozone members, the fact that a precedent of exit had been established would probably lead to a permanent upwards re-pricing of their sovereign debt. For both sides, it would be a very risky leap into the unknown.

A short-lived default should not therefore lead to Grexit. It would not be the end of the road for Greece, but potentially the precursor to a breakthrough on a longer-term deal.

Much would depend upon the response of the eurozone and the ECB in the short term, economic growth (or the lack of) in the medium term and of course the economic performance of Greece relative to the other eurozone countries in the longer term...

So we could soon find out if the eurozone/ECB really do have a plan B. One would hope so, after all, as a certain Mr Wilde might have said: to lose one country may be regarded as a misfortune; to lose two looks like carelessness.