Britain's new prime minister says the country's financial situation is worse than previously thought, and will require major spending cuts to avoid a debt crisis like that in Greece.

Prime Minister David Cameron said Monday the steep budget cuts needed to stop the growing deficit would affect everyone in the country.

Britain's budget deficit is about $226 billion (156 billion British pounds) or equivalent to 11 percent of the nation's annual output, one of the highest deficit levels among wealthy nations.

Mr. Cameron said the debt crisis in Greece was a warning of what could happen in countries that "lose their credibility" by continuing to spend much more money than they take in.  

Greek economic problems contributed to stock market losses around the world and riots in the streets of Athens, and prompted rating agencies to cut that nation's credit rating.

A report from the International Monetary Fund Monday says delayed or half-hearted budget cuts could undermine lender confidence in European governments, and cause the euro to fall in value.

The IMF experts also predict that Europe faces high and persistent unemployment and subdued investment.