Even 'small crisis' enough to tear EU apart, Moody's warns

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However, it said endless austerity demands in return for bail-outs had fuelled deep resentment across the region, especially in countries weighed down by sky-high unemployment.

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[Mervyn] King said the single currency area would have to choose between an economic "depression" in the south, higher inflation in northern states like Germany, permanent fiscal transfers or a "change of composition of the euro area".

However, he told an audience in Frankfurt that there was "a limit to the economic pain that can be imposed in pursuit of a federal Europe without risking a political reaction.