Euro zone policymakers need to do more to convince markets and the public that they are dealing with the currency bloc's debt crisis, Foreign Secretary William Hague said on Monday.
Hague, who has long been a critic of the single currency, said he hoped and believed that members of the 17-member single currency would resolve a crisis that is weighing on the British economy, but that Britain had to prepare for all eventualities.
Last week, we welcomed the appointments of Prime Ministers in Greece and in Italy, Hague said in a speech to a business conference in London.
But the euro zone has more to do to reassure markets and citizens that is dealing decisively with its problems, he told delegates at the Confederation of British Industry conference.
In a question and answer session, Hague was asked whether he thought the euro zone would fail.
The foreign secretary warned that failure could have very, serious consequences across the world and would hit non-euro members like Britain.
The Prime Minister (David Cameron) and the Chancellor (George Osborne) have in particular been putting forward to governments in the euro zone, what we think they should do and we want them to succeed on that basis, Hague said.
We hope and believe they will succeed, he added.
However, he said that work was going on in the background to prepare for a variety of scenarios.
Nevertheless, whatever we think will happen, we do have to prepare for contingencies, he said.
The Treasury of course are doing the necessary work to prepare for contingencies but in a quiet, assiduous way and that is the way to keep that work so I'm not going to go into any more detail about it, he added.
Britain's large banking sector and its dependence on the euro countries as export markets leave it exposed to the fallout from the crisis in the euro zone.
Earlier on Monday, outgoing ECB board member Juergen Stark said the euro zone's sovereign debt crisis has spread from its periphery to its core but the region's economic weakness is likely to be temporary.
(Reporting by Keith Weir and Fiona Shaikh)