The UK is "not immune" to the eurozone debt crisis on Friday, Chancellor George Osborne has warned, ahead of a crunch meeting of EU finance ministers.
In a speech to the Telegraph Festival of Business conference in Manchester on Friday, the chancellor said that Britain is capable of weathering the storm, but will be exposed to the economic falterings in the US and the eurozone - the UK's two biggest export markets.
After a week of turmoil in the eurozone and admissions from senior politicians of the "stark reality" that the UK economy faces, Osborne reaffirmed his commitment to deficit reduction, saying it has produced "lower interest rates and protected our credit rating."
"If we abandoned it now there would be a collapse in that confidence and a surge in interest rates", he said.
The chancellor will also meet EU finance ministers in Poland today, along with US Treasury Secretary Tim Geithner. Geithner's attendance is a signal of global concern over the turmoil in the eurozone.
On Thursday evening, justice secretary Ken Clarke said politicians had been "overwhelmed" by the scale of the financial crisis and criticised global leaders' "paralysis".
"The political leadership in the United States of America and large parts of Western Europe has been totally overwhelmed by the dimensions of this global financial crisis, it's not able to cope.
"You have paralysis in Washington, and you have paralysis in large parts of Europe because they are incapable of agreeing, everybody's fighting short-term politics.
"I don't think the British government comes out too badly when you make that comparison. But our fate partly depends on how these people sort it out", the former Chancellor told BBC 2's Newsnight.