Treasury minister Danny Alexander said the euro zone debt crisis was hitting business confidence, although the recent G20 summit in France had made positive steps towards boosting global financial firepower to help combat the region's problems.

Of course the situation in the euro zone is very serious, it's one that has an effect on business confidence here, he told BBC television on Sunday.

After all, three million jobs in the UK depend on our trade with the European Union, and those people and those businesses are affected by the uncertainty.

Equally of course, having a resolution to the euro zone crisis is in a sense the most important thing that can happen to the UK economy this autumn.

He said the G20 summit of the world's major economies in Cannes last week had seen a greater commitment to increasing resources to the International Monetary Fund (IMF), giving it more global firepower to deal with the crisis, though he acknowledged no specific figure had been agreed.

And he said euro zone countries had delivered a commitment to enlarging its bailout fund to a trillion euros.

He said Britain had a maximum 40 billion pounds available to the IMF without needing to go to parliament for approval, but only 5 billion pounds was currently in use.

We have the capacity to go up to that 40 billion ceiling without a vote in parliament, he said.

We are not actually handing over cash, it is a promise to pay to back up the IMF's lending if things go wrong.

The G20 summit was overshadowed by political turmoil in Greece arising from its debt problems, and uncertainty over Italy's ability to rein in its high debt.

When asked if Britain's Treasury was planning for Greece's exit from the euro zone, Alexander said: I think that seems like the least likely outcome of the Greek situation.

The most important thing we can do as a responsible global leader is to work alongside the Americans, alongside the Chinese and others, to put maximum pressure on the euro zone including Greece to take responsibility for sorting out the problems that they have and take our own responsibility for ensuring there is the kind of global bazooka to sit alongside the European bazooka.

Alexander said the extra flexibility afforded to Britain being outside the euro zone had been a real strength.

Nevertheless, it faced a long, slow road to economic recovery, with surveys indicating the country could be heading for another recession having exited the last one in mid-2009.

The Conservative-Liberal Democrat government is to launch a 500 million pound fund on Monday to help boost housebuilding and infrastructure.

The opposition Labour Party and unions accuse the coalition of cutting spending too fast and too deeply to reduce a record budget deficit, and unions are threatening to strike over planned changes to public sector pensions at the end of November.

Alexander said the government had made a very generous, very positive offer on pensions.

I think most of the unions, the moderate unions, want to reach an agreement, but there are some who seem desperate, hell-bent if you like, on strike action, he said.

(Reporting by Avril Ormsby; Editing by Erica Billingham)