MILTON KEYNES, England, June 7 (Reuters) – Prime Minister David Cameron told Britons on Monday the scale of the country’s budget problems was even worse than he had anticipated and cited crisis-hit Greece as an example of the risk of failing to act.

Cameron painted a bleak backdrop two weeks ahead of an emergency budget on June 22 in which his coalition government will give more details of measures to cut a deficit running at 11 percent of national output.

Giving few details of where cuts will come, he attacked the previous Labour government for economic mistakes over the past decade that he said had left the legacy of a debt crisis.

“Greece stands as a warning of what happens to countries that lose their credibility, or whose governments pretend that difficult decisions can somehow be avoided,” Cameron said in a speech in Milton Keynes, central England.

“I want to set out for the country … why the overall scale of the problem is even worse than we thought,” he said, adding that the structural nature of the debt meant “a return to (economic) growth will not sort it out”.

Cameron said the public sector had grown too large under Labour. If no action were taken, within five years its debt-servicing costs would be more than it spends on schools in England, climate change and transport combined.

“Based on the calculations of the last government, in five years’ time the interest we are paying on our debt, the interest alone is predicted to be around 70 billion pounds ($101 billion). That is a simply staggering amount.” [ID:nCAM070610]

G20 SUPPORT

Cameron said the weekend summit in South Korea of the Group of 20 leading economies had endorsed the steps taken by Britain. The government, which took office last month, has already trimmed six billion pounds in costs to start to reduce a deficit that reached 156 billion pounds in the financial year to April.

In opposition, Labour has warned that cuts planned by the coalition risks killing off a fragile economic recovery and throwing Britain into a double-dip recession.

Cameron acknowledged the cuts to come would hurt a government still enjoying something of a honeymoon with voters.

“This is fraught with danger. This is a very, very difficult thing we are trying to do,” he said in answer to questions at distance learning institute the Open University.

Cameron heads Britain’s first coalition government since 1945, his centre-right Conservatives having teamed up with the smaller Liberal Democrats after last month’s election.

Flanked by Lib Dem Treasury minister Danny Alexander, Cameron said the coalition would make it easier to win over the public, saying there were “two parties together facing up to the British people.”

Economist Alan Clarke of BNP Paribas said it was natural for a new government to lay the blame for ills at the door of its predecessor and that the message for the budget was clear.

“Fiscal tightening, spending cuts and tax increases are going to bear down on growth and disposable income. It’s going to hold back growth which is going to hold back inflation. It’s not going to be pleasant for anyone,” Clarke said.

Finance minister George Osborne and Treasury number two Alexander will present on Tuesday the framework for a spending review this year.

The Treasury is expected to consult on the spending review with the private sector, voluntary organisations, trade unions and the general public. (Additional reporting by Matt Falloon, Tim Castle and Peter Griffiths; Editing by Ruth Pitchford)