The biggest strategic risk facing the UK is economic rather than military, and the eurozone crisis is of "huge importance" to defence chiefs as well as City bosses, the head of the British armed forces has said.

General Sir David Richards, the Chief of the Defence Staff, said the country's main effort must be the economy, as "no country can defend itself if bankrupt".

In a lecture to the Royal United Services Institute in London last night Gen Richards said: "I am clear that the single biggest strategic risk facing the UK today is economic rather than military."

He continued: "Over time a thriving economy must be the central ingredient in any UK grand strategy. This is why the eurozone crisis is of such huge importance not just to the City of London but rightly to the whole country, and to military planners like me. The country's main effort must be the economy. No country can defend itself if bankrupt."

Gen Richards said the Strategic Defence and Security Review had "rebalanced" British defence and security for the next decade, and the decisions would still leave the country a "powerful relative to our allies".

He said all Western nations were changing their defence structures and argued Britain will still be a "front rank player" in the Nato alliance.

Gen Richards stressed the value of forming partnerships with other nations, saying that had been crucial to the successful operation in Libya. "Libya is not a template but one key lesson for us is this need for partners," he said. "Our alliances, formal and informal, established and new, will help shape our military actions over the next decade."

Commanders at all levels would have a duty to adopt tactics to "fit the kit we have rather than the kit we wished we had", he said.

"We need to combine realism with imagination. We must be content with the good enough and ensure training and relevant tactics make up for the exquisite technology we may have aspired to.

"It will require us to accept that some capabilities will be kept at lower readiness or sometimes provided by others. It will mean taking risk. But managing risk is ultimately what we do and none of us in the armed forces are discomforted by the challenge."