David Cameron has said he still believes the euro will survive, despite eurozone leaders needing to take "decisive steps" to resolve the crisis.
In an interview with Sky News, the prime minister said the single currency holding together was the "most likely outcome."
"I think that the most likely outcome is, yes, it will hold together but it has to take some pretty decisive steps."
However he said that in the long-term, those steps included re-balancing the European economy to tackle the divide between Germany and Southern Europe.
"There are the short-term sticking plaster steps of a proper firewall to prevent contagion around Europe, a much more decisive settlement for Greece which the problem still hasn't gone away, strengthening the European banks.
"But that is only the short term. The longer term is that you have got to address the fact that there is a lack of competitiveness between Germany on the one hand and many of the southern European countries on the other.
"You can't have a single currency with those fundamental competitiveness divides unless you have massive transfers of wealth from one part of Europe to another."
The prime minister's comments come in the wake of reports Britain could indirectly give billions more to eurozone economies through increasing its contributions to the IMF.
Angela Merkel and Nicolas Sarkozy met on Monday for the first time in 2012 to flesh-out new fiscal rules for the eurozone following a European summit in December.
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