The Greek and eurogroup finance ministers failed to agree on new bailout terms or even a way to move negotiations forward last night, after a six-hour meeting in Brussels.

As a result, analysts at Open Europe are forecasting the likelihood of a Greek exit from the eurozone at 40% – an outcome that would have heavy political consequences and could increase volatility in financial markets.

“It’s not great news. They failed to even reach the minimum expected by most, which was some kind of framework in which negotiations could take place and given the timeline, many people had hoped they would reach some kind of structure for negotiations to continue, but that doesn’t seem to be the case. People are starting to wonder how much time they have to strike a very complex deal,” Open Europe head of economic research Raoul Ruparel tells GTR.

After raising objections over the wording of a joint statement agreed on during the talks, the Greek government released its own, which confirmed there had “been no agreement”.

Meanwhile, eurogroup president and Dutch finance minister Jeroen Dijsselbloem published the following remarks on the EU Council website: “We had an intense discussion and constructive, covering a lot of ground, also making progress, but not enough progress at this point to come to joint conclusions. (…) You will have to bear with us a little longer.”

Talks will continue on Monday, and Ruparel explains that the situation now depends a lot on the European Central Bank’s (ECB) willingness to keep lending to Greek banks until an agreement is reached.

Last week the ECB announced that it would no longer accept Greek bonds as collateral against loans to the country’s banks, taking a hard line approach towards the new government’s demands. However, it later agreed €60bn of emergency liquidity assistance for the country’s banks, giving them some breathing space.

Speaking to GTR ahead of the meeting, IHS senior economist for Europe Diego Iscaro, said: “The outcome of the meeting on Wednesday evening is going to be an indication of whether the positions of these two parties are a little bit closer. If we still see disagreement and no common position coming up after that, the likelihood of having a positive outcome will be low.”

However, he also pointed out that both parties had too much to gain from Greece staying in the eurozone to let discussions get to breaking point.

“Not reaching an agreement would have such huge costs, particularly for Greece but also for the eurozone, because nobody knows what would happen if Greece left. Firewalls are in place but it’s still difficult to predict how financial markets would react if it happened.

“The eurozone economies are also exposed to Greece since they provided €190bn in loans so obviously they want to get their money back, which may not happen if Greece leaves the eurozone. This is why it’s likely that a deal will be reached, but it’s not looking good.”

Markets haven’t reacted strongly to the uncertainty so far, and even this morning the euro was flat against the US dollar, the Athens stock market was calm and Greek bond yields were stable (though still very high).

According to Iscaro, this proves that the risk of a Grexit domino effect is low.

“If you look at the economic but also political situation in eurozone countries, they are very different. Even in Spain, you have a party quite similar to Syriza but the likelihood of it getting into power in Spain is still quite low.

“That’s why markets haven’t reacted very strongly so far: They still believe that an agreement will be reached, but also, Greece is seen as an outlier. Having said that, I don’t think there would be no consequences if Greece were to leave,” he said.

Both Ruparel and Iscaro point out that there is no major risk for European exporters (who are not very exposed to Greece), and that a fall in the euro could even create favourable conditions for them, but volatility in EU financial markets could lead to a lack of investment.

“In general investors will be a bit hesitant to put money into the economy in the short term until they see where the eurozone as a whole is going to go. There will be some short-term uncertainty, a lot of noise and probably a lot of volatility in markets and currencies, but it really depends on what the response is from the EU,” Ruparel says.