The prospect of a "chaotic" Greek eurozone exit is becoming more likely regardless of the outcome of crucial elections in the country on Sunday, Gordon Brown has claimed.
The former prime minister warned the single currency was reaching a "day of reckoning" and suggested France and Italy would follow Spain in needing a bailout as the eurozone crisis deepens.
It comes as the International Monetary Fund issued its latest assessment on Spain's economy. The report said the outlook is "very difficult" and the government is likely to miss its deficit reduction target.
Mr Brown issued a stark warning that the Mexico talks, which start on Monday, are the "last chance" to sort out the turmoil. In an article for news agency Reuters he claimed even German banks may need extra capital.
"Whichever way the Greeks vote in Sunday's election, a chaotic exit from the euro is becoming more likely: Its tax revenues are collapsing, not rising as promised," he wrote. "Unable to regain access to markets, Portugal and Ireland will soon have to ask for their second IMF programs.
"Sadly Italy - and potentially even France - may soon follow Spain in needing finance as the European recession deepens. Even German banks, which are some of the most highly leveraged, are not immune from needing more capital."
He added: "This newly discovered but elemental characteristic of an economic union - that a lender of last resort is essential - will have to be acknowledged for Spain, Italy and possibly even France as well as for Portugal and Ireland and for Greece, too, if they stay in the euro."
Speculation is mounting that central banks, including the Bank of England, Bank of Japan and US Federal Reserve, are preparing to launch emergency support measures to cushion the blow of an implosion in the eurozone following the elections in Greece.
Success for anti-austerity parties, such as radical left-wingers Syriza, could lead to Greece leaving the euro, which would probably send stock markets into freefall. Its exit from the euro could lead to contagion across the eurozone and beyond.
However, European Commission president Jose Manuel Barroso has insisted the euro currency and the "European project" are both irreversible. EU leaders would "stay the course" in the midst of the crisis, he declared.
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