Nick Clegg warns that a Greek exit would cause ‘irrevocable damage’

A GREEK exit from the eurozone would do “irrevocable damage” to European Union countries, Lib Dem deputy prime minister Nick Clegg warned yesterday on a visit to Berlin.

The remarks, which contrast with Prime Minister David Cameron’s “make up or break up” call, came in a speech just hours after European leaders in an unofficial summit in Brussels on Wednesday night failed to agree a solution to the Greek crisis which is threatening to derail the euro.

With elections coming up in Greece it is believed that parties opposed to the austerity measures which came with the bailout package are set to do well again.

And last night Germany’s Chancellor Angela Merkel once again blocked the creation of a new euro bond to prop up for floundering 17-state currency zone which was being pushed for by new French President Francois Hollande.

And the disagreement came as a new survey revealed that the downturn in the eurozone is faster than expected.

The Markit index, based on a survey of purchasing managers in the manufacturing and service sector, fell to 45.9 in May, a 35-month low.

Markit’s chief economist, Chris Williamson, said his firm’s research indicated that the European downturn “gathered further momentum in May”.

He said: “The survey is broadly consistent with gross domestic product falling by at least 0.5 per cent across the region in the second quarter, as an increasingly steep downturn in the periphery infects both France and Germany.”

In his intervention Mr Cameron had said the eurozone needed to decide quickly what to do about Greece or accept the break up of the currency union with other countries such as Spain and Italy.

But in his speech yesterday Mr Clegg, who was trying to underline his pro-European credentials in comparison to the Tory euroscepticism, insisted that Greece needed to be kept in the euro.

He said: “No rational person interested in the wealth and wellbeing of Europe’s citizens could advocate taking such a risk.”

He criticised the notion “being whispered behind cupped hands” that Greece’s exit could be a good thing for the rest of Europe.

He said that Europe must show leadership to find a way out of the crisis and address the problems arising from the lack of fiscal coherence in the eurozone. We have got to hit back against this fatalism which says that Europe can’t fix this,” he said.

“And by the way, let me challenge the fashionable assumption being whispered behind cupped hands – that for some countries, leaving the euro wouldn’t be that bad, that actually a Greek exit now would be in everyone’s best interests.

“My own view is that that wildly underestimates the unpredictable, irrevocable damage that could be done to a monetary union when it is shown not to be permanent.”