British Prime Minister David Cameron has issued an ultimatum to the Greek people that fresh elections must decide once and for all whether the country stays in the eurozone. The Prime Minister insisted failure to provide clarity could prove disastrous for the world economy, the BBC reported Monday. The message came as cabinet colleague Ken Clarke said the European banking system was already \"in tatters\". Clarke, the Justice Secretary, warned that Britain was \"heavily exposed\" to potential problems and could be among the next targets for market speculation. Meanwhile, Deputy Prime Minister Nick Clegg also criticized the lack of leadership on the eurozone crisis, raising fears of a rise in extremism and civil unrest unless it was addressed. Cameron, in America for back-to-back G8 and NATO summits, said talks with fellow world leaders had \"crystallized\" the problems. \"We now have to send a very clear message to (the Greek) people - There is a choice, you can either vote to stay in the euro with all the commitments you have made, or, if you vote another way, you are effectively voting to leave,\" he said. \"The crucial thing is that eurozone leaders have to put in place contingency plans for both of those eventualities - really clear plans to keep our economies safe and stable.\" \"What I think would be bad for Greece, bad for Europe, bad for the world would be if we just allowed the can to be kicked down the road with an inconclusive outcome,\" he said. \"It has just got to try and make sure that this is a moment of clarity and decisiveness for the eurozone.\" The premier indicated that German Chancellor Angela Merkel - who has driven the demands for austerity and fiscal discipline within the eurozone - had shown signs of a willingness to compromise. \"I think she did show some flexibility in terms of what more can be done on the growth agenda and also what more can be done to handle the risks inside the eurozone,\" he said. \"The fact that you have got countries like Japan, America, Canada round the table, as well as Britain, who are outside the eurozone but affected by what happens inside the eurozone, I think, was helpful in bringing that important pressure to bear.\" Justice Secretary Clarke, a former chancellor, for his part said Greek voters had to \"face up to reality\". \"These are hardships inflicted on them by the irresponsibility of their former politicians,\" he said. \"But they cannot just vote for saying, \'could people just carry on giving us some money so we do not have to change anything\'.\" Clarke said the consequences would be \"serious\" if the Greek people elected \"cranky extremists\" and defaulted on their debts as a result. \"No-one knows exactly what will happen in the rest of Europe ... But the banking system is in tatters, it is weak in very many places,\" he went on. \"We don\'t know what the knock on effects would be, they could be very serious and of course people will start barking at the door of Portugal, Ireland, Italy, and here in Britain. \"Our banks are heavily exposed to some of these countries, we have recapitalized them so far ... I obviously hope the Greeks will vote responsibly and that we can avoid turmoil.\" In the meantime, Clegg warned that Germany must do more than merely insist on austerity if the eurozone was to stabilize. He also admitted that the coalition may have been too \"dogmatic\" in its rhetoric on cutting spending, the BBC added. For his part, opposition Labor Shadow chancellor Ed Balls said yesterday that it would cause \"huge damage\" if Greece made a disorderly exit from the eurozone. \"Greece needs to stay in for at least as long as the eurozone needs to sort its act out,\" he said.