Britain faces "many great challenges" in 2012 if it is to avoid the fate of some European economies, Deputy Prime Minister Nick Clegg warned on Wednesday in his New Year message.
Liberal Democrat leader Clegg said that the coalition government led by Conservative Prime Minister David Cameron had pulled Britain back "from the brink", but said further action was needed.
"We have had to make some very difficult decisions, but they've been the right ones for the long term good of our country," Clegg said in his speech, extracts of which were released by his party.
"A country that was at risk of falling prey to the international markets has been pulled back from the brink.
"We only need to look at what is happening in countries on our European doorstep to see what we could have ended up dealing with in 2011."
The coalition came to power in 2010 pledging to tackle Britain's record deficit with a string of harsh austerity measures, but has faced pressure to ease off to promote economic growth.
Clegg added: "The next year will be one that poses many great challenges for everyone in Britain, but I know we must continue to do what's right for our country."
His comments on other European nations hit by the eurozone crisis follow a diplomatic row with France earlier this month over the state of their respective economies.
The spat erupted when the French central bank governor and ministers attacked the British economy, suggesting rating agencies should be mulling a debt downgrade of Britain rather than France.