Britain was last night planning for the collapse of the eurozone as Spain weighed up a bailout that could cost UK taxpayers £5billion.

The Government is preparing for the biggest mass default in history and the break-up of the single currency bloc.

Analysts warned that euro meltdown would wreak havoc in the banking system and plunge the global economy back into recession.

Whitehall sources said contingency plans are being drawn up – and indicated that the longer the euro limps on, the more time Britain has to prepare.

Fears are mounting that Greece will be forced to default on its debts as the crisis threatens to sink Spain and Italy.

The storm hit Belgium last night as the country’s credit rating was cut from AA+ to AA by Standard & Poor’s amid tumbling confidence in the region.

And a leading French economist, Jacques Attali, the former president of the European Bank for Reconstruction and Development, said there was only a 50-50 chance of the euro surviving until Christmas.