Cameron Warns Of Eurozone Doomsday

LONDON: British prime minister David Cameron on Saturday warned that the country's economy will be hit hard by further turmoil in eurozone , saying there's a big question mark over the future of the common European currency.

"If we risked spending a lot more money or giving up on our plan to get on top of our debts and our deficit, interest rates could go up, mortgage rates could go up. That would be the worst thing for family finances," PM Cameron said, adding that if UK interest rates hit Italian levels, it would be "calamitous" .

Asking Britons to "prepare for the worst" , Cameron later told BBC, "These are very worrying times. It's a very difficult time for the eurozone , there's real turbulence in the markets, real question marks over whether countries can deal with their debts and a big question mark over the future of the eurozone."

The European crisis has already impacted on India's economic growth in the current financial year, with import demands from Europe predictably slowing down. However, as the world waited with bated breath, there was hope for Europe with the Italian chamber of deputies debating a package of economic reforms which, when approved, could introduce an era of fiscal discipline in Europe's third largest economy. The Italian senate voted by 156 to two to endorse the cuts.

The rising expectation over Berlusconi's exit was, however, tempered by a warning from the head of the EU, Herman Van Rompuy, that a Eurozone split "would destroy the (European) single market" . He was responding to Cameron's remarks on the future of eurozone.

It is anticipated that the Italian reforms will cut public spending drastically and stimulate sluggish growth to stall market panic over its $2.58 trillion debt and fears of a Greek-style meltdown.

There are serious concerns in Italy that even if a Mario Monti government is formed - and Monti is a respected economist - this could be brought down within months by political infighting and an inability to push through the deeply unpopular reforms. Angela Merkel, German chancellor, is expected next week to back proposals to change treaties to allow countries to leave the euro - the common currency of 17 European countries. French and German officials have reportedly already begun discussions on how countries like Greece and Italy could be eased out of the eurozone if they refuse to cut public spending and borrowing.