The European Commission's top economic official, Joaquin Almunia, has called on the US to tackle its deficits, which he said were the root cause of financial market turmoil.
'The current account deficit and the public deficit are the root cause of the turbulence,' Almunia said.
'As regards the response of the US authorities, any measure that they adopt should be aimed at reducing the external deficit and the fiscal deficit,' he added.
Last night euro zone finance ministers called for calm in the face of the current turmoil on international stock markets. But they said they can no longer rule out a recession in the US.
Such a recession would impact on Europe, but less severely than in the past, as Europe is less dependent on exports to the US.
Finance ministers from the 15 countries that use the euro as their currency - including Ireland - met last night with the current market volatility weighing heavily on them.
Luxembourg's Prime Minister, Jean-Claude Junker - who chairs the Eurogroup - said it was important not to overreact to the current market turmoil, caused primarily by the US sub-prime mortgage crisis.
Nevertheless, after months of downplaying the prospects of a recession in the US, euro zone finance ministers now say they can not rule out the possibility of the US going into a recession this year.
Such a recession would impact on Europe, and the finance ministers have trimmed their growth forecast from 2% to 1.8% for the euro zone.
But EU Economics Commissioner Joaqim Almunia Joaqim Almunia says a US recession would not have such a severe impact on Europe as previous recessions, as the two economies have become less linked.
The euro zone now exports more to Britain than to the US.
Mr Junker also said the European Central bank was right to target inflation with its interest rate policy, despite criticism from France that euro interest rates were making the economy less competitive, and should be cut.
Euro zone finance ministers have called for calm in the face of the current turmoil on international stock markets. But they say they can no longer rule out a recession in the US.
Such a recession would impact on Europe, but less severely than in the past, as Europe is less dependent on exports to the US.
Finance ministers from the 15 countries that use the Euro as their currency - including Ireland - met last night with the current market volatility weighing heavily on them.
Luxembourg's Prime Minister, Jean-Claude Junker - who chairs the Eurogroup - said it was important not to overreact to the current market turmoil, caused primarily by the US sub-prime mortgage crisis.
Nevertheless, after months of downplaying the prospects of a recession in the US, euro zone finance ministers now say they can not rule out the possibility of the US going into a recession this year.
Such a recession would impact on Europe, and the finance ministers have trimmed their growth forecast from 2% to 1.8% for the euro zone.
But EU Economics Commissioner Joaqim Almunia says a US recession would not have such a severe impact on Europe as previous recessions, as the two economies have become less linked.
The euro zone now exports more to Britain than to the US.
Mr Junker also said the European Central bank was right to target inflation with its interest rate policy, despite criticism from France that euro interest rates were making the economy less competitive, and should be cut.
