Speaking to the BBC, Johnson said that similarly to these peripheral Eurozone countries, the UK economy was also under significant pressure. "The financial markets are taking a long hard look at the fiscal accounts of all these countries and they don't like what they see," he said. "Now Greece is an extreme example; there I think you can see that it's going to get very messy very quickly - but unfortunately the budget situation in these other countries is also weak. 

 

"And I have to add the UK to this list. Unless you can persuade the markets that you're really going to bring the budget under control within the foreseeable future and you're going to have some credible actions - and you're going to have to do some persuading - you're going to have big trouble." 

 

Johnson also argued in a post on his blog Baseline Scenario that “the Europeans are not being careful – and it’s not just about Greece anymore.”

 

“Worries about government debt and associated public sector liabilities (e.g., because banking systems are in deep trouble) have spread through the Eurozone to Spain and Portugal.  Ireland and Italy are next up for hostile reconsideration by the markets, and the UK may not be far behind.”

 

The former IMF chief economist’s comments came as G7 representatives met in Canada to discuss the growing economic crisis in Greece. Following the meeting, US treasury secretary Tim Geithner confirmed plans to allow the European Union take control. “The European authorities gave us a very comprehensive review of the program now in place to address the challenges faced by the Greek economy,” Geithner said. “I just want to underscore they made it clear to us, they the European authorities, that they will manage this with great care.”

 

Germany’s finance minister Wolfgang Schaeuble told Frankfurter Allgemeine Zeitung that, "All our partners outside the Eurozone have the clear impression that Europeans can solve these problems.” 

 

UK chancellor, Alistair Darling was confident that the G7 economies were on the right path. "In the last 18 months, we've come through an extremely turbulent period,” he said. “But I think we can be confident, although we remain cautious, that we are on the right path, provided we see that through."

 

Johnson disagrees with the comments of Messrs Geithner, Darling, and Schaeuble, and asked “What are the stronger European countries, specifically Germany and France, doing to contain the self-fulfilling fear that weaker Eurozone countries may not be able to pay their debt – this panic that pushes up interest rates and makes it harder for beleaguered governments to actually pay?”

 

“The Europeans with deep-pockets are doing nothing – except insist that all countries under pressure cut their budgets quickly and in ways that are probably politically infeasible.  This kind of precipitate fiscal austerity contributed directly to the onset of the Great Depression in the 1930s.”