A WAVE of "extremism and xenophobia" will sweep across Europe unless political leaders take urgent action to deal with the debt crisis, Nick Clegg has warned.
The Deputy British Prime Minister predicted that arguments in Britain about whether to pull out of the European Union would be “like a small side show compared to the rise of political extremism” in the next few years.
In his bleakest assessment to date, Mr Clegg admitted that his beloved European project faces a “huge” crisis of confidence as the public loses faith in the EU “as a whole”.
Mr Clegg’s intervention followed warnings from Cabinet ministers that the eurozone debt crisis is approaching a “moment of clarity” when it is “quite likely” that Greece will be forced out of the single currency.
In an interview with the German magazine, Der Spiegel, the Liberal Democrat leader said EU nations are “condemned to work with each other” but warned that nine European governments have “fallen” since 2009.
“Everybody should be more active,” he said. “At the moment, what’s happening is you have one emergency summit after another; you have one election after the other; you have one bail out after the other.
“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.
“I, as a passionate Liberal and pro-European, think it would be a disaster if a lack of grip and a lack of a comprehensive solution were to lead to a push towards the extreme Right or the extreme Left.”
He added: “If the eurozone does not come up with a comprehensive vision of its own future pretty soon - in three, four, five years time - we will have a whole range of nationalistic, extremist, xenophobic and populist movements increasing across Europe.
“Frankly, questions about the British debate about the European Union will be like a small side show compared to the rise of the political extremism. That is what’s at stake.”
Greece is without a permanent government after inconclusive elections earlier this month.
New polls next month could give control to political parties that reject the austerity measures enforced on the indebted nation as a condition of international bailout deals.
European leaders last weekend attended a Group of Eight summit to discuss the eurozone crisis and the world economy which failed to overcome German resistance to guaranteeing Greece’s debts.
Today, Spain's economy minister Luis de Guindos warned that the country's economy will contract again in the second quarter.
"The second quarter will show a fairly similar performance to that of the first quarter," he said.
Spain's economic output contracted by 0.3pc in the first quarter of 2012 and by the same amount in the last quarter of 2011.
The Minister also denied that Spain needs any foreign help for its banking sector.
The sector is staggering under the weight of loans that turned sour after a 2008 property crash.
"No external help of any kind is needed," Mr de Guindo added.
Speaking in Chicago at a Nato meeting yesterday, the British Prime Minister said that the Greek elections are now effectively a referendum on euro membership.
“It’s very important that everyone is clear that the choice Greece faces is maintaining its commitments and maintaining itself in the eurozone, or deciding that’s not the path it wants to take, he said.
“It’s up the Greeks how people do and don’t vote but we’ve got to make sure it’s a moment of clarity and decisiveness for the eurozone.”
If Greece does remain in the eurozone, Mr Cameron said, other European nations led by Germany should take decisive action to ensure that Greece and other indebted euro members have much greater financial support.
“This decision point, the Greek election, has got to become the moment where all of the right plans are put in place to secure the future of the eurozone currency, the eurozone economy, and therefore help stabilise the global economy,” he said.
“The alternative is kicking things further down the road and there not being a resolution and I think there needs to be a resolution because it’s the lack of resolution that’s leading to a lack of confidence.”
Mr Clarke, a former chancellor said Greek voters should “face up to reality” and accept the terms of the bailout deals. “They can’t just vote to say could people please just keep giving us some money so we don’t have to change anything.”
However, he told Murnaghan on Sky News that it was “quite likely” that the election will mean Greece is forced to leave the euro.
“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 likely but it doesn’t necessary follow.
That would be “disastrous” for Greece, he said, and have unpredictably serious consequences for the rest of Europe.
“No one knows exactly what will happen in the rest of Europe, but the banking system in tatters, it’s weak in very many places. We don’t know what the knock-on effect could be.”
The G8 summit saw continued tensions over Germany’s role in resolving the eurozone crisis. Angela Merkel of Germany rejected pressure from other leaders for Germany to help underwrite the debts of weaker eurozone members.
Mr Cameron said it was “unfair” to suggest that the Camp David meeting had not achieved anything. The summit was useful because it increased the “pressure” on Mrs Merkel, he said.
“The fact that we got coutnries like Japan, Canada, America round the table as well as Britain who are outside the eurozone but are affected by what happens inside the eurozone was helpful in bringing that important pressure to bear,” he said.