Obama says US stands by Europe in debt crisis

Debt problems and austerity measures have led to major protests in several European countries [EPA]

The US president has said his country stands ready to do its part to help Europe solve its deepening debt crisis, following a summit with EU leaders at the White House.

While Barack Obama offered no specifics on how the US may be willing to assist Europe, he said Europe’s financial success was crucial to the US economy.

“This is of huge importance to our economy. If Europe is contracting, or if Europe is having difficulties, then it’s much more difficult for us to create good jobs here at home,” he said on Monday

Obama hosted European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, High Representative Catherine Ashton and other officials for talks dominated by the eurozone crisis.

In a joint statement both sides said they would take “all necessary steps” to end the continent’s debt crisis.

Van Rompuy said slower global growth is not solely due to the European Union and that other nations must act.

During the summit, the US and the EU forged a high-level group to promote jobs and growth, that will be staffed by the European Commissioner for Trade and the US Trade Representative.

OECD warning

The meeting came amid stark new warnings on the depths of the eurozone turmoil and renewed fears that the exposure to Europe of US banks could rebound and harm the slow US economic recovery.

The Organisation for Economic Co-operation and Development (OECD) warned that policymakers were failing to see the urgency of acting to tackle risks to the global economy.

Top global economies are one step from a deep recession driven by the eurozone debt crisis and a fiscal stranglehold in the US, the OECD warned on Monday.

The organisation downgraded its global growth forecast to 3.8 per cent for this year and 3.4 per cent next year.

The European Central Bank must ride to the rescue to avert “massive wealth destruction, bankruptcies and a collapse in confidence in European integration,” the organisation said.

The OECD urged the European Central Bank to intervene massively to help stabilise debt markets and cut interest rates, while it said US politicians need to change a fiscal policy that could tip their country into recession.

Greece, Italy Spain, Portugal and Ireland are so far worst affected by the European fiscal crisis, but there are fears that the problems could spread and that the eurozone is on the verge of collapse.