Nick Clegg warns that eurozone collapse will fuel 'extremism'
A collapse in the eurozone would create the "ideal recipe for an increase in extremism and xenophobia", Deputy Prime Minister Nick Clegg has warned.
As the Greek debt crisis continues, he told the German newspaper Der Spiegel the single currency could not survive through "fiscal discipline alone".
But he admitted the coalition had at times been too "dogmatic" in its own rhetoric on cutting spending.
Labour warned it would be "incredibly dangerous" if Greece left the eurozone.
The country is due to hold a second general election next month, after parties were unable to form a coalition government following an inconclusive result earlier this month.
There is widespread speculation that it will leave the eurozone, amid opposition to German-led demands that it cuts public spending, and default on its debts.'Huge sympathy'
At the Nato summit in Chicago, Prime Minister David Cameron said he believes the Greek elections amount to a referendum on Greece's membership of the euro.
He said: "We now have to send a very clear message to people in Greece: there is a choice. You can either vote to stay in the euro, with all the commitments you've made, or if you vote another way you're effectively voting to leave."
End Quote Ed Balls Labour
Unless there's a change in Germany, we aren't going to see this crisis resolved”
He warned that the eurozone had to prepare "decisive contingency action" for a possible Greek departure from the single currency.
Several eurozone economies are currently in recession, as is the UK's.
In recent days US President Barack Obama has asked European countries to focus on "jobs and growth", while French President Francois Hollande has made similar recommendations.
Speaking to Der Spiegel, Mr Clegg called for greater integration by eurozone economies, saying: "You have to have something which creates a fiscal accompaniment to monetary union.
"Whilst I have a huge amount of sympathy with German taxpayers and German politicians who are reluctant, understandably because Germany is the paymaster of the European Union, to entertain these ideas, I fear that they are unavoidable.
"It is not sustainable to believe that the eurozone can thrive through fiscal discipline alone - it also has to, at some level, include an ability to either share debt or to deal with shocks in one part of the system or the other through fiscal transfers."'Completely different'
He warned that the crisis could result in electoral success for the far right and far left unless Europe's leaders acted decisively, saying: "This cannot carry on, because the combination of economic insecurity and political paralysis, we know this from the history of our continent, is the ideal recipe for an increase in extremism and xenophobia."
Labour has criticised the Conservative-Liberal Democrat coalition for being too fixated on cutting public spending, while lacking a "credible" plan for growth.
Shadow chancellor Ed Balls told the BBC: "The problem is David Cameron, for the last two years, has been supporting the German position which is now an increasingly isolated position.
"[This is] a very different position from the Obama/Hollande view that we need a more balanced plan on austerity: medium-term, tough decisions, but a plan now on jobs and growth.
"Unless there's a change in Germany, we aren't going to see this crisis resolved and I don't think David Cameron's posturing today helps at all. I just think it makes things worse."
Mr Clegg denied that the coalition parties were "austerity fanatics", but admitted: "Maybe our rhetoric has been too dogmatic in the early stages because we needed to persuade people it was necessary."
He added that, when the government was told the economic growth predictions had been lowered, it had done "something completely different" and decided "we're going to take two more years to do this".
Mr Clegg said: "So we've actually enlarged the time, far from going too fast we've actually said 'Okay we're going to take this quietly and steadily'."
UK Independence Party leader Nigel Farage said: "Nick Clegg is warning, as I did months ago, that the failures of EU leadership and policies is leading to a growth of extremism.
"What did he think would happen when his beloved European Union is designed to specifically strip away national democracies and leave people impotent over their own futures? If you remove their ability to decide democratically then you leave people with fewer legitimate ways to express their opposition to the status quo."