London: British Prime Minister David Cameron yesterday urged Europe to sort out its currency crisis, calling on the 17-country Eurozone "to make-up or it is looking at a potential break-up."
"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," Cameron said in a speech in Manchester.
Cameron said that if Greece is forced out of the single currency union, the possible collapse of the Eurozone poses huge risks to the UK economy but he said Britain was prepared to weather the fallout.
"Whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system," Cameron said.
The Prime Minister added that the danger for the Eurozone laid in its peripheral economies such as Portugal, Spain and Italy and that these "high deficit, low competitiveness countries" in the Eurozone need to cut spending, increase revenues and undergo structural reform.
"We all need to address Europe's overall low productivity and lack of economic dynamism, which remains its Achilles heel," Cameron added.
"Most EU member states are becoming less competitive compared to the rest of the world, not more."
Alistair Darling, who was in charge of Britain's Treasury in 2008, said the impact could be severe.
"A Greek exit could start a fire that would spread all along the Mediterranean as other countries would come under pressure. The repercussions, particularly in the banking sector, could cripple Europe for years to come," Darling wrote in yesterday's edition of The Scotsman newspaper.
"This is uncharted and highly risky territory," Darling added.
The government's business minister, Vince Cable, cautioned against panic, saying there was no reason why the Greek crisis should spread to other countries.
"We need to get the risks in perspective," Cable said in a BBC radio interview.
"Greece itself is a small country, it's only 2 per cent of the European economy. The risks arise if the crisis were spread to other weaker, countries."
