PM Insists Eurozone Needs 'Decisive Action'

David Cameron has insisted that "decisive action" is needed for eurozone stability on a conference call with fellow European leaders to discuss the Greek crisis.

The Prime Minister spoke to German chancellor Angela Merkel, French president Francois Hollande and Italian prime minister Mario Monti for around 45 minutes on the video call.

It gave the leaders a chance to prepare for the G8 summit at Camp David this weekend and discuss the eurozone crisis together for the first time.

A Downing Street spokeswoman described it as a "constructive discussion" about some of the world's wealthiest nations' priorities.

"He discussed with the others their priorities for G8: the eurozone - including Greece, growth and the importance of expanding trade relations between the US and the EU.

"The Prime Minister emphasised the importance of Greece and the Eurozone taking decisive action to ensure financial stability and prevent contagion," she said.

The call took place just before Greece's economy was dealt a further blow by Fitch ratings agency, which downgraded its credit rating.

The agency said it reduced Greece from B-minus to CCC because it was worried by its failure to form a coalition government and the possibility it could leave the eurozone.

Earlier, Mr Cameron warned political leaders they were running out of time to solve the crisis at a speech in Manchester.

Addressing business leaders, the Prime Minister declared that the single currency is at a "crossroads".

Reinforcing his message to MPs on Wednesday, Mr Cameron said: "It either has to make up or it is looking at a potential break up.

"Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone or we are in unchartered territory which carries huge risks for everybody."

The Prime Minister made clear Britain faces "perilous economic times" and vowed to do everything in his power to keep the country safe amid the ongoing uncertainty.

But he rejected demands to ditch the drastic austerity measures adopted by the coalition, saying it is time to "stand firm" and ignore the "dangerous voices calling on us to retreat".

Mr Cameron said that it is in Britain's interest for the eurozone to sort out its problems, but promised to work to protect Britain and secure its economy and financial system whatever happens.

Only days after the UK economy slipped into a double dip recession, he admitted: "We are living in perilous economic times.

"Turn on the TV news and you see the return of a crisis that never really went away: Greece on the brink...the survival of the Euro in question. Faced with this, I have a clear task: to keep Britain safe.

"Not to take the easy course - but the right course. Not to dodge responsibility for dealing with a debt crisis but to lead our country through this to better times."

Insisting this could be done, he said: "We are well on the way in this journey. Since we took office two years ago, we have cut the last government's deficit by more than a quarter. Yesterday, we had encouraging news on unemployment, too."

Now more than ever, Mr Cameron insisted, is the time for the coalition to hold its ground and reject Labour's alternative.

"Let me be clear: we are moving in the right direction - not rushing the task, but judging it carefully and that is why we must resist dangerous voices calling on us to retreat," he said.

"Yes, we are doing everything we can to return this country to strong, stable economic growth. But no, we will not do that by returning to the something for nothing economics that got us into this mess."

The Prime Minister added: "We cannot blow the budget on more spending and more debt. It would squander all the progress we've made in these last two, tough years.

"It would mean more austerity, for even longer. It would risk our future. It is not an alternative policy, it is a cop-out."

Labour leader Ed Miliband told Sky News: "David Cameron isn't part of the solution, he is part of the problem. He promised Britain there would be recovery and he has delivered a recession.

"Sorting it out means not just sorting out the eurozone problems, but getting that proper plan for growth in Europe, just like we need a proper plan for growth here in Britain," he said.

He added: "Even though we have got a recession made in Downing Street, he is refusing to change."

But Business Secretary Vince Cable said: "We have to be focused very very clearly on growth and jobs but we also have to be financially disciplined. These things are not alternatives, the two things go together."