US & Canada

Barack Obama: Europe faces tough decisions

European leaders must make difficult decisions to steer the eurozone away from crisis, US President Obama says.

Speaking at the White House, Mr Obama said the US would support Europe as it implemented the hard solutions needed to solve the ongoing debt crisis.

He said a deep new recession in Europe would have an impact on the US economy.

Greece's future in the eurozone was a matter for the Greek people, he said, but "further hardship" must be expected if the country chose to leave the euro.

Greeks will go to the polls on 17 June to try and end a political impasse that eurozone leaders say is harming Greece's ability to tackle its economic crisis.

Meanwhile, Spain's government has sought to downplay rumours that it will request a bailout for its troubled banks from Europe as early as Saturday.

'Hard' solutions

Outlining a series of "specific steps" needed to take to ensure stability within the eurozone, the president was at pains to say he would not "scold" Europe.

Mr Obama said European leaders needed to stabilise the continent's financial system and inject capital into weak banks "as soon as possible".

"The solutions are hard, but there are solutions," Mr Obama said, saying the US was offering advice, but that "these decisions are fundamentally in the hands of Europe's leaders".

This is not the first time Mr Obama has sounded a note of impatience towards European leaders, the BBC's Washington correspondent Paul Adams notes.

The US president said several times that the sooner they acted, the quicker people and markets would regain confidence.

Former Obama economic chief Larry Summers told the BBC on Thursday that Europe had not acted quickly or strongly enough, suffering from a "deep and profound and continuing failure of realism" on the part of its leaders.

Paris to Pittsburgh

Mr Obama also reprised his calls for the US Congress to pass the remaining parts of his domestic jobs plan, in an effort to strengthen the US economy against possible shocks from Europe.

Speaking to reporters at the White House, Mr Obama said the European crisis "matters to us, because Europe is our largest economic trading partner".

"If there's less demand for our products in places like Paris or Madrid, it could mean less business for manufacturing in places like Pittsburgh and Milwaukee."

Mr Obama spoke amid rising concerns in the US that the economy is being affected by the situation in Europe.

"Local and state government hiring is going in the wrong direction," Mr Obama said, "The problem is that it requires Congress to take action."

He said the legislative body should act to increase hiring in the public sector as well as in the construction industry.

But a remark that the private sector was "doing fine" was quickly seized upon by his Republican rivals.

"For the president of the United States to stand up and say the private sector is doing fine is going to go down in history... as an extraordinary miscalculation," presumptive Republican nominee Mitt Romney said during a campaign stop in Iowa.

The Republican National Committee immediately put out a web ad that portrayed Mr Obama as out of touch.

The president later sought to take the sting out of the Republican response, saying that it was "absolutely clear that the economy is not doing fine".

He said despite "good momentum" in the private sector, growth rates in the public sector were falling behind.

With the presidential election five months away, analysts are openly querying whether underwhelming recent economic data - including weak job growth - is related to the ongoing problems in Europe.

During a press conference after Mr Obama's remarks, House Speaker John Boehner said the president should quickly extend expiring tax cuts in order to create jobs.

Earlier, Mr Obama said the policies his Republicans opponents have pursued "would add weakness to the economy".