Italy poses ‘clear and present danger’ to eurozone, PM warns

By Tony Hudson

Italy's precarious economic situation is a threat to the stability of the Euro and the eurozone, David Cameron has warned.

The prime minister drew attention to the "totally unsustainable" cost of Italian borrowing and warned that, without immediate and decisive action, it could bring down the euro.

"Italy is the third-largest country in the euro. Its current state is a clear and present danger to the eurozone and the moment of truth is fast approaching," he told business leaders in London.

Italy was forced to pay over six per cent yesterday on five billion euros of new bonds issued yesterday.

Next year it will have to refinance spending on over 300 billion euros of debt, meaning its debt crisis is far from over.

"What is happening in Italy is a warning to any country, any government, without a credible plan to deal with excessive debts and excessive deficits that you need a plan and you need to stick to that plan," Mr Cameron added.

Ed Miliband criticised the prime minister's handling of the crisis, saying Mr Cameron had chosen to "lecture from the sidelines".

"We need an immediate European Council this weekend. The UK government should demand one," the Labour leader said.

"That meeting must not be allowed to break up until a comprehensive solution has been put in place for the crisis."

Tensions over Europe came as the EU downgraded its 2012 growth forecast from 1.8% to just 0.5%.