Varoufakis vs Schauble: Greece and Germany slog it out

The finance minister of Greece's new left-wing government, Yanis Varoufakis, is meeting his German counterpart, Wolfgang Schauble, in Berlin today, in what is being billed as a heavyweight encounter just hours after the European Central Bank announced a tough new approach to Greek debt.

The Financial Times says Varoufakis is "emboldened" by the popular mandate to abandon the country's austerity regime - largely imposed by Germany - while Schauble is "intransigent" and "determined to make Athens pay".

The German finance minister is expected to insist that Greece sticks to its EU-backed recovery programme and Varoufakis scraps his election promises to abandon the previous government's austerity regime and unpopular spending cuts.

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Varoufakis is likely to have a tougher time of it than new Greek PM Alexis Tsipras, who the FT says found a "receptive" audience yesterday when he met Francois Hollande and the heads of the European Commission and European Council.

Indeed, the meeting between Varoufakis and Schauble is a showdown between the radical left and centre-right orthodoxy - and the rest of Europe is watching.

The Guardian is live-blogging the day's events, and quotes from German daily Die Welt, which says: "Varoufakis, the libertarian communist, is coming as if for a dog fight, his shirt not tucked into his trousers, an open collar.

"He is threatening, he is complaining, he wants victory - above all over Germany. Because of such a scholarly ruffian no one should feel they have to s*** their pants, otherwise we're bound to lose."

Though Tsipras had a good day yesterday, Varoufakis did not fare so well. He met the top brass of the European Central Bank (ECB). Shortly after the meeting, the ECB announced a surprising crack-down on Greek debt, the BBC reports.

The bank announced it would no longer accept Greek government bonds as collateral for lending money to Greek banks.

Varoufakis's government insisted there would be "no adverse impact" on Greece's financial service sector but the Athens stock market tumbled this morning by more than six per cent, with bank stocks down 16 per cent.