THE crisis-torn eurozone is at a critical crossroads, David Cameron will say today, warning that if it chooses the wrong path in not dealing with its problems then Europe, including Britain, faces "huge risks" to economic recovery.

In a speech to business leaders in northern England, the Prime Minister will repeat his starkest message to date that the eurozone "either has to make up or it is looking at a potential break-up", with the survival of the single currency in question.

Stressing again he will not stray from the Coalition's austerity programme, he will add: "Be in no doubt: whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system."

Mr Cameron's remarks follow bleak words from Sir Mervyn King, the Governor of the Bank of England, who said the eurozone was "tearing itself apart without any obvious solution".

No 10 yesterday explained the UK Government wanted eurozone countries to agree to a package of measures such as so-called euro bonds, recapitalising struggling banks, a larger bailout fund and structural reforms to improve productivity and competitiveness.

Presenting the Bank's quarterly inflation report, Sir Mervyn said he and his colleagues were working on contingency plans in the event of a worst case scenario for the euro.

Warning the UK was at risk of being in the path of the eurozone storm, the governor ruled out a return to pre-crisis levels of growth before 2014.

The Bank once again cut its 2012 forecast, saying it expected Britain's economy to grow by just 0.8% this year, down from its previous prediction of 1.2%.

In a further blow to households, the Bank said the rate of inflation would fall more slowly than expected, remaining above the UK Government's 2% target for the next year or so.

Sir Mervyn said: "We are navigating through turbulent waters, with the risk of a storm heading our way from the continent. We don't know when the storm clouds will move away."

Meanwhile, the FTSE 100 Index lost nearly 1% at one stage yesterday as troubles in Greece threatened to take the crisis to even more serious levels.

The country could be denied further EU bailout funds if a party opposing necessary austerity measures comes to power, which could in turn lead to Greece exiting the euro with all the uncertainty and threat of contagion that could create.

Today, Mr Cameron will say Britons are living in "perilous economic times ... with Greece on the brink and the survival of the euro now in question".

He will note: "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. My message is that it can be done."

The PM will say the Government "cannot blow the budget on more spending and more debt" as this would lead to more austerity and for longer.

Last night, Alistair Darling, the former Labour Chancellor, urged eurozone finance ministers to take decisive action.

"The risk is this does not stop at Greece. If it spreads to bigger countries this could be disastrous for Europe, which is why it is so important to us that the eurozone members get on with it."