'This is the most serious financial crisis at least since the '30s, if not ever,' says BoE governor; Spain and Italy downgraded

Grave warnings as Euro nations suffer downgrade

Prime Minister David Cameron has called on European leaders to take decisive and swift action to resolve the credit crisis that has engulfed the Europe.

Cameron said any delay to recapitalisation measures could put the world economy in a "precarious" situation.

His comments come after further turmoil across the Eurozone, with both Italian and Spanish debt downgraded by the Fitch credit rating agency. Italy’s rating has dropped from AA- to A+, while Spain’s rating fell to AA-.

French and German economic officials met on Sunday to draft a package of "important changes", which is said will be announced before the G20 summit in Cannes next month.

German chancellor Angela Merkel said both countries are "determined to do the necessary to ensure the recapitalisation of Europe’s banks".
Meanwhile, former UK Prime Minister Sir John Major on Sunday told the BBC that Europe’s bans need to recapitalise before Greece defaults on its debts.

He said it would be “catastrophic” if Greece defaulted before the banks had time to recapitalise and guard themselves from the impact.

Elsewhere, Bank of England governor Sir Mervyn King has claimed that Britain is in the grip of the world’s worst ever financial crisis, following his announcement that the Bank of England would inject and additional £75 billion into the economy.

King said “this is the most serious financial crisis at least since the 1930s, if not ever."

As credit lines to games companies and businesses have dried up, European leaders are being called on to resolve the issue as a matter of urgency.

Cameron told the Financial Times on Monday: "The situation with the world economy is very precarious. The Eurozone is probably contributing more to that uncertainty and lack of confidence than anything else. You either make the Eurozone work properly or you confront its potential failure."

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