Greek and Britain have about the same GDP per capita ($33,000K-ish)
But the GNI per capita is quite different, less than $30K for Greece and more than $45K for the UK. The reason for the difference is that a lot of profits from what Greece makes are sent abroad to foreign investors; those profits count toward the GNI of the owner (UK), but toward the GDP of the producing country (Greece) even though the producer can't necessarily tax those profits.
(Those are mainly French, British, and German investors which is probably why they're interested in preventing Greece from defaulting...)
Even though deficits this year are similar in Greece and Britain, Greece owes more than 100% of GDP while Britain owes around 70%. Relative to GNI (I don't know why they report it as a fraction of GDP honestly) the difference is starker, something like 100% vs 50%, and the deficit / GDP falls too.
There are other reasons; governments and private sectors may own substantial assets which - if a crunch came - they could sell. These may not count significantly toward GNI if these assets earn little interest, which is often the case with government-held reserves. This is why Japan, which has a debt-to-GDP ratio of almost 200%, is nevertheless solvent - they've spent the last twenty years buying American bonds which if anyone ever asked "Can you guys pay up?" they could sell, so no one ever goes to Tokyo asking that.
Finally, when a country threatens to become insolvent, its interest rates get a lot higher. From 50 to 100% (very roughly), people don't seriously consider that the country will default, so interest rates are low. When they get higher (as in Greece's case) interest rates get way higher way faster, and this creates a vicious cycle since the higher interest rates go, the harder it is for Greece to pay its debts, which makes interest rates go higher again.
The common currency does create perverse incentives, since indeed right now Greece and other heavily indebted EU countries are expecting bailouts whereas in the past they would have been forced to bite the bullet and default, devalue, or never get into this situation in the first place, and creditors in northern Europe would have been less impacted. But now they're tied together.
I do not think that Greece or any eurozone countries will default, but it will cost the euro significant credibility and stir serious questions in creditworthy countries like Germany and France, especially if they bailout countries other than Greece.
It is probably a lot easier to balance a budget if you don't run a welfare state, but in general I don't think that this is really about socialism vs. whatever.