'We're not even half way through debt crisis' - Cameron warns euro break-up still a risk

By James Chapman

PUBLISHED: 01:54 EST, 30 April 2012 | UPDATED: 01:57 EST, 30 April 2012

David Cameron raised the spectre of the collapse of the euro and years more economic turmoil yesterday as he confronted his deepest political crisis since entering Downing Street.

The Prime Minister warned the debt crisis across the Continent was not even halfway through, blaming the EU's woes for Britain's double dip recession.

With support for the Conservatives at its lowest ebb since 2004, just days before crucial London mayoral and local council elections, Mr Cameron promised to 'strain every sinew' to prompt economic growth.

Prime Minister David Cameron appeared on the Andrew Marr Show yesterday and raised fears about the euro

But he warned that the eurozone's failure to contend with its problems risks dragging the UK down for years to come.

His remarks will infuriate EU leaders, who face crunch elections in France and Greece. In both countries, voters are likely to return governments which will unpick a treaty on 'fiscal union' which Mr Cameron refused to sign up to.

'I don't think we are anywhere near halfway through it because what's happening in the eurozone is a massive tension between the single currency that countries are finding very difficult to adapt to,' Mr Cameron told the BBC's Andrew Marr programme.

'It's going to be a very long and painful process in the eurozone as they work out do they want a single currency with a single economic policy and all the things that go with it, or are they going to have something quite different?'

He also dismissed the idea that the U.S. is seeing stronger economic growth and lower employment because it has delayed spending cuts and tax rises.

'First of all, the United States' plans are for tougher austerity measures than we have here in the UK. The second point – they don't have the eurozone on their doorstep,' he said.

Mr Cameron admitted last week's figures showing the economy shrank by 0.2 per cent in the first three months of the year – meaning the UK is in its first double dip recession since 1975 – were 'extremely disappointing'.

'What we mustn't do is throw away our plans for dealing with the debt, dealing with the deficit, making sure public spending is properly reduced in the appropriate areas,' he said. 'The low interest rates we have are absolutely vital.'

He insisted Britain was having to undergo a 'very difficult, painstaking process' of rebalancing its economy away from its dependence on financial services and the public sector.

Pollsters believe the double dip recession is potentially far more damaging to the Government's prospects than recent controversies over its links to the Murdoch media empire.

A YouGov poll yesterday suggested support for the Tories has crashed to 29 per cent, 11 points behind Labour and the lowest level for eight years.

The Government has stumbled from crisis to crisis following the Budget, which prompted rows over a 'granny tax' on pensioners and a 'pasty tax' on hot takeaway food.

The anti-EU UK Independence Party has seen its support rise to 10 per cent, not far behind the LibDems.

The slump has come at the worst possible time, with Boris Johnson fighting to hold the London mayoralty and nearly 5,000 council seats in 181 town halls also up for grabs.

However on the key issue of who voters trust to run the economy, the gap has not closed. Some 36 per cent say they trust Mr Cameron and Mr Osborne, down three points on a month ago, while 28 per cent say they trust Ed Miliband and Ed Balls, down two.

Labour leader Mr Miliband will today use a speech in London to denounce a 'recession made in Downing Street'.