If Greece, Ireland, Italy, Portugal and Spain were to leave the Euro it would have a massive effect on the UK. Credit Suisse has recently estimated that were the peripheral countries to exit, Barclays would face losses of €37 billion and Royal Bank of Scotland €26 billion.

And that’s just what will happen here. If the Euro crisis results in the single currency breaking apart few large Eurozone banks would be left standing and the banking sector could face a €370 billion loss. Reported in the Guardian yesterday, Credit Suisse has conducted one of the first in-depth analyses if the Eurozone disintegrates.

The Credit Suisse report makes grim reading indeed, more so in the light of Spain’s debt rising to seven per cent and the election in Greece over the weekend.

Just to add a further layer of gloom, Credit Suisse also considered what would happen if three of the worst case scenarios – Greek exit, exit of the peripheral countries and a situation where banks retrench domestically – all happen at once. The upshot would be that the banking sector would need capital injections of up to €470 billion.

As has been said many times on this blog, the UK is deeply involved in these dire predictions. We are an island only geographically, not in any other sense. The only thing on which I have ever agreed with David Cameron is that what happens in the Eurozone will deeply affect us in Britain.

The Credit Suisse analysis of the consequences of the Eurozone breaking up follows closely on the heels of a report from the right-wing think tank Open Europe warning of the consequences of Britain leaving the European Union. The Open Europe paper says: “While acknowledging that the cost of EU membership remains far too high, the EU continues, on a purely trade basis, to be the most beneficial arrangement for Britain. The alternatives often suggested – the Norwegian, Swiss and Turkish models – would all come with major economic drawbacks, not least for key UK industries such as car manufacturing and financial services, with the Norwegian model being particularly ill-suited for Britain.”

There is, of course, only one overarching conclusion to be drawn from the Credit Suisse and the Open Europe research, neither of which can be charged with being either left-wing or Euro-fanatic. It is that Britain is profoundly affected by what happens in the Eurozone and is so completely tied up with the European Union that coming out is not a realistic option.

Meanwhile, back to the banks. It was banks rather than sovereign countries which precipitated the current economic crisis. Fanny May and Freddie Mac started it all with toxic mortgages to people who could not repay their debts. This was, however, just the tip of the iceberg. Banks were deemed too big to fail. Tragically, though, people were thought fair game, hence the austerity measures which are causing so much suffering across Europe.