A Greek exit from the euro zone would set off a "chain reaction of uncertainty" that would be strongly felt in Britain's banking sector, British deputy prime minister Nick Clegg said.

He warned that a possible Greek exit would not resolve the present problems in the euro zone but would instead create greater instability across Europe and the wider global economy.

"When economies are as fragile as they are now I don't think anyone, rationally, can advocate that degree of further instability as a route out of the problems that we presently face," Mr Clegg said in an interview on BBC's Newsnight.

"I don't think Greece coming out of the euro zone can in any way be described as a recipe for success," he said.

Britain has been urging its banks to make contingency plans for at least six months, and the Bank of England has said that whether or not there was a euro zone break-up, the way ahead would be painful for Britain as well as the rest of the EU.

Mr Clegg, leader of Britain's Liberal Democrats, coalition partners of prime minister David Cameron in the Conservative-led government, shared that overall view saying UK banks would take a hit through its financial exposure to the interbank market.

"Greece exiting from the euro zone increases rather than decreases those question marks of uncertainty," he said.

Reuters