Greece is said to be considering ditching the Euro in favour of the US dollar in a devastating move which would humiliate Brussels.

Donald Trump's pick for EU ambassador Ted Malloch claimed senior Greek economists are looking into taking on the American banknotes if the country turns its back on the European currency.

Due to Greece's crippling financial crisis, officials are said to be desperately searching for an alternative to the Eurozone, which would 'freak out' Angela Merkel, according to Malloch.

People attend a rally in support for Greek people to vote 'No' at the referendum held on July 5, 2015 in Greece and against austerity in Greece in Brussels, Belgium

Donald Trump's pick for EU ambassador Ted Malloch, pictured, has made the claims

Protesters wave flags and hold up placards amid the spiraling Greek financial crisis

Supporters of Alexis Tsipras, Greece's prime minister, at a rally back in 2015

Prof Malloch was interviewed on Greek TV, where he said Greece leaving the EU would be the best option for residents, and added the current situation is 'simply unsustainable'.

'I know some Greek economists who have even gone to leading think tanks in the US to discuss this topic and the question of dollarization,' he said, according to local press.

'Such a topic of course freaks out the Germans because they really don't want to hear such ideas.'

The likely candidate for the Brussels envoy job has previously stated he expects the Euro to crash by 2018.

GREECE'S CRUMBLING ECONOMY CRISIS Greece's economy fell in the fourth quarter of 2016 as the debt-laden country faces stalemate in negotiations with its creditors. Gross domestic product (GDP) for October to December declined 0.4 percent compared with the previous quarter, although it grew 0.3 percent in comparison with the same quarter in 2015, Elstat said in a flash estimate. The figures followed two straight quarters of quarter-on-quarter growth after a period of recession. The news comes amid fears of a new debt crisis that could again jeopardise Greece's place in the euro after months of failed talks between Athens and its eurozone and International Monetary Fund (IMF) creditors. Top EU economic affairs official Pierre Moscovici is due in Athens for talks with Greek Prime Minister Alexis Tsipras on Wednesday in an effort to unblock bailout negotiations. Despite the quarterly contraction, Greece's economy grew 0.3 percent as a whole last year, according to AFP calculations - only the second time annual GDP has grown since 2008. Brussels is pencilling in Greek growth of 2.7 percent for 2017 and 3.1 percent for 2018. But Athens faces debt repayments of 7.0 billion euros ($7.44 billion) this summer that it cannot afford without defusing the feud that is holding up new loans from Greece's 86 billion euro bailout. The core of the row is whether Greece can deliver on budget targets that the IMF says are based on overly-optimistic economic forecasts. The IMF, quietly backed by Germany, insists that more pension cuts and tax hikes are necessary to reach those targets. Advertisement

His comments come just four days after one of the EU’s most powerful finance chiefs warned Greece will be forced out of the Eurozone if it fails to address its ailing finances.

Amid growing concern about the outbreak of another European economy crisis, German finance minister Wolfgang Schaeuble said calls to slash the country’s debt mountain would lead to Grexit.

The blunt assessment by Angela Merkel’s finance chief follows a damning report by the International Monetary Fund that claimed Greece’s fragile economy would soon become ‘explosive’.

In a move that is threatening to destroy the current bailout package, the Washington-based body called for Europe to send even more money to cut Greece’s ‘highly unsustainable’ debt.

The war of words about how to avoid another crisis and assist the Greek economy intensified yesterday as officials desperately tried to reach agreement.

But Mr Schaeuble rubbished the IMF’s call for the EU to inject more money into Greek coffers and said that Germany had no intention of providing a ‘debt haircut’.

‘For that, Greece would have to exit the currency area,’ he said.

‘Pressure on Greece to undertake reforms must be maintained so that it becomes competitive, otherwise they can’t remain.’

The possibility of providing yet more publically-funded debt relief to Greece is seen as a politically toxic idea in Germany just months before Merkel vies for re-election.

The stalemate between the EU and the IMF may stall a crucial £6billion repayment owed by Greece in July for which they require another bailout payment.

The European Union has insisted Greece's economy is on track despite an IMF warning over the country's 'explosive' debt that could threaten the future of the Eurozone.

A referendum to decide whether Greece was to accept bailout conditions put forward by the European Commission (EC), the International Monetary Fund (IMF) and the European Central Bank (ECB) in 2015.

The referendum was announced by Prime Minister Alexis Tsipras and was the first to be held since the republic referendum of 1974, and the only one in modern Greek history not to concern the form of government.

As a result of the referendum, the bailout conditions were rejected by a majority of over 61 percent to 39 percent approving, with the 'No' vote winning in all of Greece's regions.

German finance minister Wolfgang Schaeuble during his meeting with the Greek Prime Minister in Athens in 2013

Thousands of protesters gather in front of the parliament building in Athens on July 3, 2015

Greek officials are looking at the possibility of ditching the Euro (right) for the US Dollar (left)

People holds Greek flags during a protest march of Belgian Greeks and sympathisers against austerity measures in Brussels

A pro-European Union protester waves EU and Greek flags in front of the parliament in Athens

A standoff between the eurozone and the International Monetary Fund has dragged on for months, raising fears of a new debt crisis and sparking fresh talk of Greece tumbling out of the euro.

Talking of the Greek crisis, Prof Malloch told Skai TV: 'Greece might have to sever ties and do Grexit and exit the euro. It needs debt restructuring, it really needs debt relief, and I know people in Europe don't want to hear that.

Greece leaving EU will be a blow to Merkel

'They need to reduce the debt overhanging and that means frankly something that people in Germany and elsewhere have not been able to accept, it means a haircut to the lenders and to the banks in Germany and probably, at least in my perspective, a return to the drachma.

'So the problem then is who will manage that transition, and how, to avoid all the chaos and all the instability.'

The Tsipras government bitterly refuses more reforms, and the premier on Saturday warned creditors to 'stop playing with fire' over his country's debt problems.

An IMF report obtained by AFP last week said Greece's debt 'is highly unsustainable' and 'will become explosive in the long run'.

Talks in Brussels between Greece and its creditors on Friday ended with no breakthrough, although Eurogroup chief Jeroen Dijsselbloem said some progress had been made.

The next meeting of Eurozone ministers, on February 20, is seen as an unofficial deadline to end the stalemate ahead of important elections in Europe.

Greek central bank chief Yannis Stournaras has warned that a quick resolution is crucial in order to avoid a replay of the chaos in 2015 when Greece defaulted and just barely survived in the eurozone.

'Any later, the conditions will be much worse and it will be too late,' Stournaras told lawmakers on Monday.