A Greek exit from the euro could see British taxpayers forced to offer up to £4.8bn in loans, despite the Prime Minister's claims he has won assurances to the contrary.
The think tank Open Europe predicted yesterday that a new Greek government could eventually conclude that leaving the single currency was an attractive option, and that Britain would have no option but to help to bail out the country through the International Monetary Fund. Greece votes in a second general election later this month, with polls suggesting big gains for parties that reject the terms of the country's current international support package.
Raoul Ruparel, Open Europe's head of economic research, said he expected a new government in Greece to be able to remain in the euro temporarily by negotiating a deal with creditors.
"However, as Greece approaches a balanced budget and a more stable banking sector, though still messy, an exit will look increasingly attractive," he added.
The cost of supporting Greece if it left the single currency could be anything between £54bn and £210bn, he said, split between the IMF, the eurozone and non-euro countries, "with the UK possibly underwriting between £3.2bn and £4.8bn of the entire rescue package."