Greek exit from the euro could set off a "chain reaction of uncertainty" which would result in a "grinding slowdown in economic activity" across Europe, including the UK, Deputy Prime Minister Nick Clegg has warned.
Clegg dismissed arguments that Greece's economic woes and the instability in the single currency could best be served by a swift return to the drachma, insisting that "no-one rational" could want such an outcome.
Although David Cameron has warned eurozone countries that they must "make-up or break-up", Clegg insisted that the Prime Minister shared his view of the undesirability of Greek exit.
His comments came after a speech in Berlin in which the DPM warned that Greek withdrawal would cause "unpredictable, irrevocable damage" to the single currency, adding: "No rational person interested in the wealth and wellbeing of Europe's citizens could advocate taking such a risk: not with Greece's future, or our own."
Speaking to BBC2's Newsnight, Clegg said: "I don't think the break-up of the eurozone or Greece coming out of the eurozone can in any way be described as a sort of recipe of success. Instead, I see it as a harbinger, if it were to happen, of even greater instability, even greater uncertainty, not just in Greece, not just in south-east Europe, but across Europe, in the United Kingdom and in the global economy as a whole.
"When our economies are as fragile as they are, I don't think anyone rational could advocate that degree of further instability as a route our of the problems - and that is what, by the way, the Prime Minister believes as well."
Asked what the consequences of Greek withdrawal would be, Clegg replied: "The potential risk is that what you get then is an immediate question mark about the ability of Portugal, Spain, Italy and other bigger countries to pay their way, sort out their public finances and rescue their sick banking systems.
"That has a knock-on effect on people's confidence in the British banking system, which is very exposed one way or another to those economies. That could in turn set off a chain reaction of uncertainty.
"The thing that is most pernicious to an emerging economic recovery is more instability, more uncertainty, more big question marks about the future. That is what we must avoid.
"I have no doubt in my own mind that Greece exiting the eurozone increases, rather than decreases those question marks.
"I have got no doubt in my mind that if you have a chain reaction in the eurozone, where you get this contagion effect from Greece to other bigger countries, that will undoubtedly lead to higher unemployment, higher interest rates, less foreign investment, companies sitting on their hands and not investing in new plant machinery in factories.
"In other words - a grinding slowdown in economic activity, which is already fairly fragile. It is something I think nobody rational could wish for."
Clegg said the current difficulties were "the most serious economic and potentially political crisis that the EU as a whole has faced since the early 1970s."
But he insisted: "I don't believe the eurozone will break up."
And he added: "I think it is really important that the eurozone now reconstitutes itself on a more balanced footing. That requires monetary activism from the central bank, reforms to improve long-term competitiveness, ways of making sure that the banks are properly capitalised, sharing some kind of fiscal arrangement so richer parts of the eurozone can help poorer parts.
"What is missing here is putting all those things together in a grand bargain at the same time."
Prime Minister David Cameron
Deputy Prime Minister Nick Clegg
Chancellor George Osborne
Foreign Secretary William Hague
Health Secretary Jeremy Hunt
After a stressful year in the DCMS, Jeremy Hunt moves from Culture to Health, replacing Andrew Lansley.
Home Secretary Theresa May
Cabinet Office Minister Francis Maude
Chief Secretary To The Treasury Danny Alexander
Minister without Portfolio, Ken Clarke
Having stepped down from the Justice Department, Clarke is supposedly staying in Government rather than hanging up his boots. Chris Grayling will replace him as Justice Secretary.
Justice Secretary Chris Grayling
Chris Grayling, formerly in the Department of Work and Pensions, will step up to hold the job vacated by Ken Clarke.
Culture Secretary Maria Miller
Maria Miller has taken up the DCMS job after Jeremy Hunt moved to the Department of Health. Miller is one of the few new faces in the cabinet.
Defence Secretary Philip Hammond
Communities Secretary Eric Pickles
Education Secretary Michael Gove
Minister for Internation Development, Justine Greening
Greening, who has been subject to plenty of rumours since her fallout over a potential third Heathrow runway. Greening was in No 10 for over an hour on Tuesday, presumably arguing her case and battling to stay in the cabinet. She will now take over Andrew Mitchell's spot at DfID.
Transport Secretary Patrick McLoughlin
McLoughlin, who has spent the past two years handling backbench rebels as Chief Whip, moves to the DfT, taking over from under-pressure Justine Greening. Greening has yet to be moved.
Energy Secretary Ed Davey
Attorney General Dominic Grieve
Cabinet Office Minister Oliver Letwin
Warsi, one of the earlest victims of the reshuffle, has been ousted as party co-chairman and is to be replaced by Grant Shapps. Warsi instead moves to to the Foreign Office as a junior minister, while also working as faith and communities minister.
Party Co-Chairman Grant Shapps
Shapps, who was the housing minister, is bumped up to party chairman, taking over from the demoted Sayeeda Warsi.
Environment Secretary Owen Paterson
Spelman leaves her post, to be replaced by the former Northern Ireland secretary Owen Paterson.
Work And Pensions Secretary Iain Duncan Smith
Leader of the House Andrew Lansley
Despite recently setting in motion huge overhauls to the NHS, Lansley has been moved to fill Sir George Young's spot as Leader of the House. Jeremy Hunt will succeed him in the Department of Health.
Business Secretary Vince Cable
Northern Ireland Secretary Theresa Villiers
Theresa Villiers, who gave nothing away as she approached Parliament with a wide smile on her face on Tuesday, replaces Owen Paterson. Paterson has moved to Defra.
Welsh Secretary David Jones
Cheryl Gillan was one name always likely to be taken off the list, and she is replaced by David Jones, who served beneath her as a Minister for Wales.
Scottish Secretary Michael Moore
Chief Whip Andrew Mitchell
Andrew Mitchell has moved moved from the Department for International Development to the role of Chief Whip, replacing Patrick McLoughlin.
Lords Leader Lord Strathclyde