Former foreign secretary William Hague has broken cover to urge Greece to abandon the Euro or be stuck in a 'permanent crisis'.

Mr Hague, who stood down from politics at the election, said Greece had no chance of turning its economy around within the single currency unless Germany agreed to hand over big subsidies 'forever'.

But the former Tory leader went even further, warning that the 'Greek debacle of 2015' will not be the end of the euro crisis 'but its real beginning' – eventually dragging in Italy, Spain, Portugal and other southern European countries.

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Former foreign secretary William Hague has broken cover to urge Greece to abandon the Euro or be stuck in a 'permanent crisis'

Mr Hague's warning comes ahead of a crisis summit of Eurozone leaders in Brussels tonight amid warnings from Germany that the single currency could 'blow apart' if Greece is allowed to blackmail the rest of the Eurozone.

Angela Merkel and Francois Hollande were locked in a bitter stand-off ahead of yet another bid by eurozone leaders to prevent the debt-ridden state crashing out of the single currency.

Athens yesterday extended its 'bank holiday' until at least Thursday after the European Central Bank deferred a decision on whether to continue propping up the country's financial institutions.

But one American hedge fund, Balyasny, yesterday warned investors that Greek banks were on the verge of running dry, leaving the country 48 hours from civil unrest.

Elderly Greeks queue up to collect their pensions outside a National Bank of Greece branch in Kotzia Square, Athens

Writing in the Daily Telegraph today, Mr Hague hit out at European leaders for pushing ahead with the single currency despite warnings that it would trap some countries in permanent recession.

In May 1998 Mr Hague used a speech to warn that some countries in the Euro would find themselves 'trapped in a burning building with no exits'.

The then Tory leader predicted 'wage cuts, tax hikes, and the creation of vicious unemployment blackspots'.

Speaking today Mr Hague said: 'I hope the Eurozone leaders meeting today will remember that those of us who criticised the euro at its creation were correct in our forecasts.

German Chancellor Angela Merkel exits her limousine as she arrives at the Chancellery in Berlin

'Otherwise they risk adding to the monumental errors of judgement, analysis and leadership made by their predecessors in 1998.'

Mr Hague said Germany will have to pay Greece 'big subsidies forever' to keep the currency together.

He said that even though the hard-left Syriza government has rejected 'reasonable terms' in return for a bailout the crisis is not the fault of the Greek people.

'Greeks have experienced the loss of one quarter of their entire national income, following an unsustainable inflation of spending and debt which Eurozone membership facilitated.

'The responsibility for this crisis lies with their own former leaders and those around the EU who gave them euro membership when they were not remotely suited to it, a triumph of political desire over dispassionate economic analysis for which ordinary people are now paying the price.

'It is no good now expecting Greeks to sit quietly in a burnt out room of the burning building I described seventeen years ago.'

He urged European leaders to accept that the problem in Greece 'is not a short term crisis, but a permanent one'.

He said the Greeks will not be able to turn round their economy in a 'lifetime' within the Eurozone.

He said: 'This is not because there is something wrong with them; it is because they live in a different economic environment from Germany, and one that is not suited to being in the same currency.

'In such circumstances, it is better to be able to leave sooner, with some generous support, than leave later with even greater resentment and failure.'

But Mr Hague warned the crisis could not be contained in Greece.

He said a 'final truth' was that the crisis 'is not just about one country'.

German Chancellor Angela Merkel and French President Francois Hollande held crisis talks in Paris last night

Mr Hague warned: 'Across southern Europe, governments such as those in Italy and Spain are making brave efforts to enact long overdue reforms.

'They might not achieve enough, however, for their people to prosper when required to compete equally with their northern neighbours.

'There is a clear risk that the economic performance of the south will diverge from, not converge with, the north.

'Unless this is averted in the coming years, it will bring problems to Europe for which Greece has only been a minor rehearsal.

'In future decades, I believe students will sit down to study the folly of extending a single currency too far.