Britain could face financial losses of £366 billion, as the repercussions of Greece's debt woes continue to be felt.
The figure is cited in a report by economic and financial consultancy Fathom Consulting, whose director Danny Gabay warns that the "ultimate burden" of the Greek debt crisis may fall on the US and UK banking systems: "The notion that Greece can fall alone is fanciful and dangerous," he says. "Greece will not suffer alone - the implications of the default will reverberate far and wide."
The alarming figure comes just days after Prime Minister David Cameron vowed Britain – aside from its responsibilities as a member of the International Monetary Fund (IMF) – will not be dragged into eurozone efforts to support the Greek economy. "We make contributions through the IMF to all countries, but I'm absolutely determined we should stay out of European efforts to put more money into Greece," he said.
Meanwhile, ministers claim the UK is at risk of losing a much more conservative £2.5 billion, while the Bank of England predicts £8 billion worth of losses – both figures are substantially lower than Fathom's predictions.
The reason for the higher £366 billion figure – which equates to nearly a quarter (24%) of the UK's annual output, is because of complex insurance and derivative deals banks and financial institutions are involved in.
Gabay gives an example of how indirectly banks could be exposed to Greece's toxic economy: "The UK could have bought credit default swaps (CDS) from the US and sold CDS to the French to cover their direct loan losses to the Greeks or whoever.
"If there were a Greek default, the French banks would get hit hard, causing them to turn to the UK to cash in their CDS insurance, and we, in turn, might turn to the US."
Greek Prime Minister George Papandreou's new cabinet received a narrow vote of confidence yesterday when it was approved in parliament by 155 votes to 143 (with two abstentions).
The Greek government must now show it is serious about addressing its economic woes, with fiscal tightening measures and higher taxes if it is to qualify for a €12 billion (£10.7 billion) emergency loan from the eurozone.