Britain's Cameron ups pressure on eurozone leaders

(LONDON) - British Prime Minister David Cameron on Thursday renewed his call for eurozone leaders to take decisive action or face the break-up of the single currency over the Greek debt crisis.

In a speech in the northwestern city of Manchester, Cameron urged core countries in the 17-member eurozone, of which Britain is not a member, and the European Central Bank to support demand and cut deficits.

Cameron admitted that his message would be unpopular in Europe where he angered many leaders by delaying a fiscal treaty last year, but said his priority was to protect Britain.

"The eurozone is at a crossroads," Cameron said in the speech to business leaders.

"It either has to make up or it is looking at a potential break-up," he said.

"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 was holding a videoconference at 1515 GMT with German Chancellor Angela Merkel, new French President Francois Hollande, Italian premier Mario Monti, EU president Herman Van Rompuy and and European Commission head Jose Manuel Barroso.

The meeting was called to discuss the upcoming G8 meeting of industrialised nations in the United States at the weekend, but Cameron's Downing Street office said the eurozone was likely to come up.

Fears of a Greek exit from the eurozone have spiked after voters on May 6 supported anti-austerity parties that want to tear up an EU-International Monetary Fund bailout agreement and reverse harsh austerity measures.

Cameron's finance minister George Osborne, who earlier this week warned against speculating on the future of the euro, told lawmakers Thursday that now the "genie was out of the bottle".

"When eurozone central bank governors and finance ministers openly speculate on the possibility of a Greek exit, then the genie is out of the bottle. That, and the Greek elections, make this a perilous time," he said.

Osborne added that Britain is "making the necessary contingency plans -- we will take the steps needed to secure our economic stability and protect our financial system."

Cameron said he was open to new ideas for ensuring European stability.

"I welcome the opportunity to explore new options for such monetary activism at a European level, for example through President Hollande's ideas for project bonds," he said.

But he urged the eurozone to become more competitive, support demand through loose monetary policy and cut its deficits.

"I realise that countries inside the eurozone may not relish advice from countries outside the eurozone -- especially from countries, such as Britain, that have debts and difficulties of their own. But this affects us too," he said.

Cameron, whose Conservative party is largely sceptical on Britain's European Union membership, infuriated many European leaders in November last year when he vetoed a new EU fiscal treaty.

The rest of the bloc eventually went ahead without Britain.

The British premier meanwhile restated his coalition government's commitment to austerity.

"Those who argue we should spend more want us to borrow more, driving up our deficit and our debt and putting our hard-won credibility and low interest rates at risk," he said.

But in a sign of concern about growth, he said he had asked the finance ministry to "examine what more we can do to boost credit for business, to help housing and infrastructure."

The Bank of England on Wednesday warned that the eurozone debt crisis was the biggest threat to Britain's economic recovery, even if a credible solution is found.

BoE governor Mervyn King said the eurozone was "tearing itself apart without any obvious solution".