Merkel and Hollande will meet for crisis talks and the ECB faces a crucial decision over its funding lifeline after Greece rejected austerity by 61% to 39% 
 
 European leaders were scrambling for a response on Monday after a resounding no from Greek voters in a momentous referendum on austerity which could send the country crashing out of the eurozone. 
 
 
 
 With Europe’s financial markets set to follow Asia’s overnight lead by going sharply into the red, German chancellor Angela Merkel was to meet with French leader Francois Hollande in Paris after Greece overwhelmingly rejected international creditors’ tough bailout terms. 
 
 Greek referendum: Asian markets fall sharply after Greece no vote – live Read more 
 
 The pair spoke by telephone late Sunday, declaring the referendum decision must “be respected” and calling for an emergency eurozone summit which the EU president, Donald Tusk, said would be held on Tuesday. 
 
 A flurry of other meetings will also be held on Monday as European leaders sized up the implications of the vote, a victory for Greece’s radical prime minister, Alexis Tsipras, who insisted it did not mean a “rupture” with Europe. 
 
 With the ramifications still unclear and some analysts putting the chances of Grexit at very high, the European commission head, Jean-Claude Juncker, was to hold a teleconference on Monday morning with European Central Bank chief, Mario Draghi, Tusk and Jeroen Dijsselbloem, head of the eurogroup of finance ministers. 
 
 Meanwhile German and French finance ministers were set for talks beginning in Warsaw at 9am BST, while the euro working group of top treasury officials will meet in Brussels. 
 
 Britain said it would do “whatever is necessary to protect its economic security” and David Cameron would be chairing a meeting on Monday to review its reaction, a government spokesman said. 
 
 “This is a critical moment in the economic crisis in Greece,” a Downing Street spokesman said. “We will continue to do whatever is necessary to protect our economic security at this uncertain time. We have already got contingency plans in place and later this morning the prime minister will chair a further meeting to review those plans in light of yesterday’s result.” 
 
 In Athens, Greece’s controversial finance minister Yanis Varoufakis announced that he was standing down immediately after pressure from the country’s “assorted partners”. 
 
 He said he hoped his decision would make it easier for Tsipras to negotiate a new deal with other European leaders. 
 
 
 
 Earlier on Monday morning, Tsipras met the Greek president, Prokopis Pavlopoulos, and asked him to convene a meeting of Greek political party leaders. “We must move forward immediately with negotiations … a strong national front must be created to seek an immediate solution,” Tspiras told Pavlopoulos after the vote. 
 
 
 
 Tsipras said the creditors – the ECB, the European commission and the International Monetary Fund (IMF) – would now finally have to talk about restructuring Greece’s huge debts. 
 
 “This time, the debt will be on the negotiating table,” he said. 
 
 As the magnitude of the result became clear – the margin was an unexpected 61.3% to 38.7% – thousands of no voters began pouring into Syntagma Square in front of the parliament in Athens to celebrate, waving Greek flags and chanting: “No, no.” 
 
 On Sunday night, speaking before his resignation, Varoufakis said the no vote was a rejection of the “iron cage” of the eurozone. 
 
 “Today’s no is a big yes to democratic Europe. A no to a vision of the eurozone as a boundless iron cage for its people. From tomorrow, Europe, whose heart tonight beats in Greece, starts healing its wounds, our wounds.” 
 
 
 
 The sweeping victory for Tsipras, who challenged the might of Germany, France, Italy and the rest of the eurozone, represented a nightmare for the mainstream elites of the EU. With Greek banks closed, withdrawals limited, capital controls in place and the country rapidly running out of cash, emergency action will be needed almost immediately to avoid a likely banking collapse. 
 
 But it is not clear whether the European Central Bank will maintain a liquidity lifeline to Greece and whether the creditor governments of the eurozone will sanction instant moves to salvage Greece’s crashing financial system. 
 
 
 
 Germany’s vice-chancellor and social democratic leader, Sigmar Gabriel, said Tsipras had burned his bridges with the rest of the eurozone. But the Greek leader believes he has strengthened his negotiating hand. 
 
 
 
 Dijsselbloem, who chairs the eurozone group of finance ministers, said the result was “very regrettable” for the future of Greece. “For recovery of the Greek economy, difficult measures and reforms are inevitable. We will now wait for the initiatives of the Greek authorities,” he said. 
 
 
 
 The Greek vote is a huge blow to EU leaders, particularly Merkel, who has dominated the crisis management through her insistence on fiscal rigour and cuts despite a huge economic slump, soaring unemployment and the immiseration of most of Greek society. 
 
 
 
 “The failure of the euro means the failure of Merkel’s [10-year] chancellorship,” said the cover of the latest issue of Der Spiegel, the German weekly. It depicted her sitting atop a Europe in ruins. 
 
 
 
 Greek referendum result: what happens next? Read more 
 
 On the markets overnight, Japan’s Nikkei stock average was down 2.2% and in Hong Kong the Hang Seng was down more than 3%. 
 
 
 
 In Australia, around $A30bn was wiped off the value of shares as the country’s benchmark ASX200 index fell almost 1.5% at the opening. 
 
 Oil prices also fell sharply on Monday amid worries about poor demand growth amid global oversupply. Brent futures were down over a percentage point at $59.56 per barrel. 
 
 However, the single currency held up against the dollar, after dropping in the immediate wake of the vote. It was at $1.1044 in Tokyo trade, ticking up from $1.0963 soon after early results of the bailout reforms vote were known. 
 
 Shinya Harui, currency analyst at Nomura Securities in Tokyo, said the common currency was holding up as investors “assess the spill-over risks in case of a Greek exit from the eurozone”, adding: “I personally think the chance (of the Greek exit) is very high, at around 70-80%.” 
 
 
 
 In Athens the mood was jubilant. “Spain, and then Portugal, should follow this path. We’re for a Europe of the people,” said one no supporter, Giorgos, 25, brushing off concerns the result could see the debt-laden country plunge further into the financial mire. 
 
 But the mood of jubilation was not shared by all no voters, with some saying they had been confronted with an impossible choice. 
 
 But even “yes voters were ambivalent about their camp’s apparent defeat. 
 
 Paris, a 41-year-old dentist, said she was resigned rather than sad because, with the dire state of Greece’s finances and Tsipras in power, there was “no real hope either way”. 
 
 Greece’s conservative opposition chief, Antonis Samaras, announced his resignation as the early results of the referendum became clear on Sunday. His New Democracy party had campaigned for a yes result in the referendum. 
 
 Greece is teetering on the brink of financial collapse. If it does not receive cash and loans soon from European institutions, it could still be forced to resort to government IOUs or a return to the drachma to keep its economy running. 
 
 Last Tuesday, the country defaulted on a €1.6bn (£1.1bn) repayment to the IMF, becoming the first developed country to fall into arrears to the institution. As a result, it is cut off from further IMF financing until it settles the amount. 
 
 The same day, the last bailout for Greece ran out, despite Tsipras’s appeals for it to be extended until the referendum was over. 
 
 Greece was officially declared in default on Friday by the European Financial Stability Facility, which holds €144.6bn of Greek loans. 
 
 Greek banks are now reportedly almost illiquid after a run by panicked customers in the runup to the referendum, which Tsipras abruptly called on 27 June to break an impasse with the creditors. 
 
 A week-long closure of the banks and capital controls that included restricting daily ATM withdrawals to just €60 and blocking money transfers abroad slowed the outflow. 
 
 But if the ECB does not inject emergency euros into Greece’s banks in the next one or two days, more businesses will go belly up and ordinary Greeks will suffer. 
 
 Government spokesman Gabriel Sakellaridis said late on Sunday that the Bank of Greece was asking for the ECB to provide money under its Emergency Liquidity Assistance mechanism. ||||| The British government is making urgent preparations to cope with the fallout of a possible Greek exit from the single currency, after the governor of the Bank of England, Sir Mervyn King, warned that Europe was "tearing itself apart". 
 
 Reports from Athens that massive sums of money were being spirited out of the country intensified concern in London about the impact of a splintering of the eurozone on a UK economy that is stuck in double-dip recession. One estimate put the cost to the EU of Greece making a disorderly exit from the currency at $1tn, 5% of output. 
 
 Officials in the United States are also nervously watching the growing crisis: Barack Obama on Wednesday described it as a "headwind" that could threaten the fragile American recovery. 
 
 In a speech in Manchester before flying to the United States for a summit of G8 leaders, the British prime minister, David Cameron, will say the eurozone "either has to make up or it is looking at a potential breakup", adding that the choice for Europe's leaders cannot be long delayed. 
 
 "Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone, or we are in uncharted territory which carries huge risks for everybody. 
 
 "Whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system." 
 
 Officials from the Bank, the Treasury and the Financial Services Authority are drawing up plans in the expectation that a Greek departure from monetary union – increasingly seen as inevitable by financial markets – could be as damaging to the global economy as the collapse of Lehman Brothers in September 2008. 
 
 With a second election in Greece called for 17 June, King dropped a strong hint that the Bank would take fresh steps to stimulate growth if policymakers in Europe failed to deal with the sovereign debt crisis. 
 
 "We have been through a big global financial crisis, the biggest downturn in world output since the 1930s, the biggest banking crisis in this country's history, the biggest fiscal deficit in our peacetime history and our biggest trading partner, the euro area, is tearing itself apart without any obvious solution," he said. 
 
 Doug McWilliams, of the Centre for Economic and Business Research, said a planned breakup of the single currency would cost 2% of EU GDP ($300bn) but a disorderly collapse would result in a 5% drop in output, a $1tn loss. "The end of the euro in its current form is a certainty," he added. 
 
 Alistair Darling, who was Chancellor of the Exchequer under the former Labour administration, said: "This has the seeds of something disastrous. It is madness. If it spreads to bigger countries, this could be really disastrous for Europe. It could consign us to years of stagnation." 
 
 Capital flight from Greece has increased since it became clear that a coalition government could not be formed after the election earlier this month. The Greek president, Karolos Papoulias, said citizens were withdrawing their money amid "great fear that could develop into panic" at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency's website. In little more than a week following the election on 6 May, €3bn was withdrawn from bank accounts. The central bank reported that €800m was taken out in a single day earlier this week. 
 
 The head of the International Institute of Finance banking lobby, Charles Dallara, said money was leaving Greece at a growing pace due to political uncertainty. "There has been a pickup of deposit flight from Greece, but I think that is stabilisable once you get a new government in place, if that government reaffirms its intention to remain in the eurozone." The damage to the rest of Europe if Greece were to leave the euro would be "somewhere between catastrophic and armageddon", he said. 
 
 The Spanish prime minister, Mariano Rajoy, told parliament that his country faced trouble financing itself as borrowing costs shoot up to "astronomic" levels. The Irish finance minister, Michael Noonan, said Dublin's plan to return to capital markets in late 2013 might not be achievable because of the uncertainty. 
 
 The first meeting between French president François Hollande and German chancellor Angela Merkel helped to calm nerves in the markets at one stage, with suggestions that Berlin might be amenable to initiatives to boost growth in Greece and the other austerity-stricken nations of the eurozone. 
 
 But the jittery mood was underlined by a fall in European shares and the single currency late in the day amid reports that the European Central Bank was cutting off its funding lifeline to Greek banks that had failed to amass enough capital to protect them from future losses. 
 
 The ECB later said it expected the Greek central bank to use part of the €130bn bailout from the EU and IMF to ensure that the country's banks were safeguarded from collapse, and that they would receive additional help from Frankfurt only once this had happened. Already delayed by the political uncertainty in Greece, €18bn is now expected to be released to recapitalise the banks. 
 
 Sony Kapoor, of the Brussels-based Re-Define thinktank, said: "The high-stakes game of chicken between Greek and other EU politicians must end now. Those saying that a Greek exit from the eurozone will not be a big deal either don't know what they are talking about, or have some ulterior motives. The social, political and economic damage to the EU from a Greek exit is potentially incalculable." 
 
 At the G8 summit, which starts on Friday, Obama will press Merkel to lean more towards a growth package for Europe, instead of pressing so hard for the austerity measures that were rejected by Greek voters. 
 
 But foreign affairs analysts said that Obama's leverage with the European leaders is minimal. Although the US has the economic muscle to help Europe out of its mess, the Obama administration has taken the strategic decision not to become involved directly. 
 
 Instead, Obama is to use the Camp David summit for some quiet diplomacy, hoping to sway Merkel to endorse some immediate actions to help growth. 
 
 King, speaking at the publication of the Bank of England's quarterly inflation report, said growth in Britain was weaker and inflation higher than Threadneedle Street had expected three months ago. It would take until 2014 for output to return to where it was in 2008, when Britain's deepest post-war recession began. 
 
 "What is so depressing about it is that this is a rerun of the debates in 2007/08 – these are not liquidity problems, they are solvency problems," King said. "Imbalances between countries in the euro area have created creditors and debtors and at some point the credit losses will need to be recognised and absorbed and shared around," he said. 
 
 "Until that is done, there will not be a resolution. That is why just kicking the can down the road is not an answer. The European Central Bank has performed heroically in trying to buy time but that time hasn't been used to put in place fundamental underlying solutions." 
 
 • This article was amended on 23 May 2012. The orginal said a estimate put the cost of a disorderly collapse of the euro at 5% of eurozone GDP, about $1tn. That has been corrected to 5% of EU output.
– Welcome to the year that the Eurozone begins its breakup and slides into certain doom—or so says one economic think tank in Europe. There is a 60% chance that "at least one country (and probably more) will leave" the euro in 2012, the head of the Centre for Economics and Business Research says. He adds that Greece's departure seems "pretty certain" and Italy will "more likely than not" follow suit, the Telegraph reports. CEBR gives the euro currency a 99% chance of failing over the next 10 years, and warns that a global depression may follow. Along the way, the think tank says, French and German banking systems could seek bailouts and even be nationalized, the Financial Post reports. For now, European leaders are trying to give Spain and Italy time to gain control over their debt. German Chancellor Angela Merkel said yesterday that 2012 will be turbulent but that she will "do everything to strengthen the euro," Bloomberg reports. (Read about S&P's plan for the Eurozone.)