The financial crisis has greatly affected the outlook for short-term economic growth in Europe, according to Juergen Stark, an executive board member of the European Central Bank (ECB).

He told a Euro Finance Week conference: “The financial crisis, which originated in the United States, has now spread across the globe. In so doing, it has greatly affected the outlook for short-term economic growth in Europe and elsewhere.”

He also said the need to address past macroeconomic imbalances ‘has clouded the medium-term outlook for potential output growth not only for the United States but also for a number of European countries’.

Stark said persistently high current account deficits and excessive increases in house prices were also present in the Euro-Zone and many non-euro EU countries.

The European Central Bank (ECB) cut rates by -1% to 3.25% since early October and markets expect another 0.5% cut in December, followed by further easing next year.

The Euro-Zone economy has contracted for the last two quarters, meaning a technical recession, and inflation is falling from a peak of 4% in summer.