British Prime Minister David Cameron joined Canada's prime minister in issuing dark warnings about the global economy on Thursday, saying Eurozone countries must act swiftly to resolve the crisis and make Europe's banks stronger.
Cameron said in an address to the Canadian Parliament Thursday the problems in Europe are so big they threaten the stability of the world economy.
"We're not quite staring down the barrel. But the pattern is clear. The recovery out of the recession for the advanced economies will be difficult. Growth in Europe has stalled. Growth in America has stalled," Cameron said.
Cameron said Eurozone countries must implement what they have agreed and must demonstrate they have the political will to do what is necessary to ensure the stability of the system.
"One way or another they have to find a fundamental and lasting solution to the heart of the problem the high level of indebtedness in many Euro countries. And whatever course they take Europe's banks need to be made strong enough so that they can help support the recovery, not put it at risk," Cameron said.
Canadian Prime Minister Stephen Harper, speaking just before Cameron, warned of the "devastating consequences" of a return to a global recession. Harper, Cameron and the leaders of Australia, Mexico, Indonesia and South Korea sent an open letter to French President Nicolas Sarkozy on Thursday calling for "decisive action" and said the barriers to action are now political as much as economic.
Canadian Finance Minister Jim Flaherty also warned of a repeat of the October 2008 crisis if action is not taken.
"There's some justified frustration with respect to the lack of political decisiveness in Europe. We have been talking about Greece as finance ministers since January 2010," Flaherty said. "The markets are reacting. There's a need for an exercise of political will, of political decision-making in Europe."
Flaherty issued the alarm before flying to Washington to meet with his G20 colleagues and taking part in the annual meeting for the 187-nation International Monetary Fund and its sister lending institution, the World Bank.
Greece could default on its debt next month unless it receives a $10.9 billion installment from a bailout fund managed by the European Central Bank, the European Commission and the IMF.
A default could destabilize other financially troubled European countries, such as Portugal, Ireland, Spain and Italy. It would also deal a blow to many European banks, which are large holders of Greek government bonds.