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Eurozone still facing collapse: David Cameron

David Cameron issued a stark warning yesterday that the eurozone is facing a renewed threat of collapse as he blamed economic woes on the Continent for Britain's double-dip recession.

In comments which will infuriate other European leaders ahead of elections in France and Greece next weekend, the Prime Minister said Europe was not “anywhere near half-way through” its currency crisis.

And he predicted that the euro could yet fall apart as countries such as Spain, Greece and Italy struggle to cope with economic constraints.

Mr Cameron said struggling economies across the Channel, which receive 40% of all UK exports, were harming Britain's prosperity. “I don't think we are anywhere near half-way through it (the crisis) because what's happening in the eurozone is a massive tension between the single currency that countries are finding very difficult to adapt to.

“It's going to be a very long and painful process as they work out: do they want a single currency with a single economic policy, or something different?”

At the weekend, thousands of people took to the streets across Spain to protest against government cuts aimed at tackling a debt crisis that has pushed the country back into recession and sent unemployment close to 25%. Next weekend, voters will go to the polls in France and Greece in elections which are likely to boost opposition to German-backed austerity measures.

Hedge funds are already anticipating Francois Hollande's likely victory next Sunday will lead to a sharp deterioration in markets' opinion of France's creditworthiness and are betting against the bonds of “core” eurozone countries.

Sources in the European Commission described Mr Cameron's remarks as “unhelpful”.

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