Nick Bate at Bank of America Merrill Lynch says such an event could cut eurozone GDP by 4 per cent - about the same as the 2008 financial crisis - and UK GDP by 2 per cent.
The problem is not a Greek exit in itself; with Greek overseas debt at $476bn, this would cost the financial system less than the $700bn loss incurred when Lehman Brothers collapsed. Instead, the danger is that Greece's departure could cause runs on banks elsewhere as savers, fearing that Spain or Portugal might follow Greece, try to prevent their savings being redenominated into weaker currencies. David Owen at Jefferies International says a full break-up of the euro could see "much of the banking sector in parts of Europe shut down".
This would hit the UK not just by reducing exports to the eurozone; which account for one-sixth of GDP. UK banks' inability to borrow from European banks, and their fears of losses on loans to southern Europe, would cause them to lend less and charge more for the loans they do make.
Although the Bank of England would try to mitigate these effects by printing money - Mr Bate says a Greek departure could see another £200bn of quantitative easing - it could not prevent them. The result would be a huge fall in gilt yields - perhaps to under 1 per cent for 10-year maturities, says Mr Owen - and a slump in share prices.
But Mr Owen says the chance of a Greek exit this year is "less than 50 per cent". He thinks it more likely that the EU and IMF would renegotiate the terms of their bail-out of the country.
This would only buy time. But such time might be necessary to put in place firewalls to reduce fears of others leaving. One such firewall could be a European Redemption Pact, as proposed by the German Council of Economic Experts, in which euro members become collectively liable for some of each others' debts, in exchange for rules on borrowing. Michala Marcussen at Societe Generale says such increased risk-sharing is the "most likely outcome".
All economists, though, agree that the euro cannot stay as it is; the options are either a break-up, or fiscal union.
