Greece euro exit 'quite likely'

Ken Clarke has said that a Greek exit from the euro is "quite likely" if radical socialists are elected next month.

The Justice Secretary predicted that the Greeks would default on their debt if the leftwing Syriza party were elected. Speaking on Murnaghan on Sky News, he also defended the Coalition's "austerity with growth" policy and said Ed Miliband and Ed Balls were "as irresponsible as the Greeks" when they were advising Gordon Brown on debt and borrowing.

Former chancellor Alistair Darling and Shadow Chancellor Ed Balls took to the airwaves to warn that reducing public expenditure was choking the recovery, but Mr Clarke told LBC Radio: "There's a silly debate breaking, I think, among some of the commentators about there is some sort of choice between austerity - by which they mean fiscal discipline - on one hand and growth on the other hand. It's actually an absolute platitude to say we need both - the British Government's been saying that for months."

Speaking after G8 leaders agreed a new focus on jobs and growth, Mr Darling told the Andrew Marr Show on BBC One: "There is no doubt that reducing public expenditure at a time when individuals and business have stopped spending does run the risk of crashing the economy, and that’s pretty much what’s happened."

Mr Balls repeated the claim on Murnaghan on Sky News. Asked whether the recession was caused by the cuts, he said: "I do, I do, and I don't think there's any doubt about that. All the evidence is that Britain went into recession before the eurozone crisis here in the domestic economy, that actually the eurozone today is not in recession while Britain is, and our recovery was choked off by bringing forward bigger spending cuts but also the early tax rises, the rise in VAT, which hit confidence, hit growth, and pushed us back into recession, pushed unemployment up and also means George Osborne's even borrowing £150bn more than he planned."

Barack Obama said last night that there was an "emerging consensus" that European countries should focus on jobs and growth. Speaking after the G8 summit, the US President said he was confident Europe could meet the challenges it faced.

A communique drawn up by the leaders at the summit in Maryland stated that they wanted Greece to remain in the eurozone and that they would promote both growth and fiscal responsibility.

Their statement said: "We agree on the importance of a strong and cohesive eurozone for global stability and recovery, and we affirm our interest in Greece remaining in the eurozone while respecting its commitments." Former Greek finance minister George Papaconstantinou suggested there were aspects of the bailout deal with the EU and the International Monetary Fund which he would like to renegotiate, but insisted Greece must honour its commitments.

This morning Justice Secretary Ken Clarke told Sky News that Greece's voters must be "responsible" when deciding their country's future.

"If they get a hopeless lot of rather cranky extremists elected at the next election then they will default on their debt. Everybody says they’ll leave the euro, actually that’s quite quite likely but it doesn’t necessary follow."