May 20 2012
Ken Clarke has delivered a stark warning about the consequences of Greece crashing out of the eurozone, saying Europe's banking system was already "in tatters".
The Cabinet minister said Britain was "heavily exposed" to potential problems and could be among the next targets for market speculation.
He also hit out at the US for failing to contribute more to bailout funds, suggesting Barack Obama's administration was "paralysed" by looming elections.
The comments, in an interview with Sky News' Murnaghan programme, came after the Prime Minister used a meeting of G8 world leaders at Camp David to step up calls for action on the eurozone crisis.
Mr Clarke, a former chancellor, signalled that fresh elections due in Greece next month would be critical.
"The Greek voters have really got to face up to reality - it is very very difficult for them, they are having a terrible time," he said. "These are hardships inflicted on them by the irresponsibility of their former politicians.
"But they cannot just vote for saying, 'could people just carry on giving us some money so we do not have to change anything'."
Mr Clarke said the consequences would be "serious" if the Greek people elected "cranky extremists" and defaulted on their debts as a result. "Everyone says they will leave the euro," he added. "Actually that is quite likely but doesn't necessarily follow."
He went on: "No-one knows exactly what will happen in the rest of Europe. But the banking system is in tatters, it is weak in very many places. We don't know what the knock on effects would be, they could be very serious and of course people will start barking at the door of Portugal, Ireland, Italy and here in Britain.
"Our banks are heavily exposed to some of these countries, we have recapitalised them so far. I obviously hope the Greeks will vote responsibly and that we can avoid turmoil."