Europe's debt crisis has deepened and become more entrenched, posing a serious risk to the economic outlook, a senior Treasury official told lawmakers on Friday.
Mark Sobel, Treasury deputy assistant secretary for international affairs, said in prepared testimony before the House of Representatives Oversight subcommittee that the crisis has sharply weakened Europe's economic prospects for next year.
Growth in the euro area is projected by most analysts to be negative this quarter and into early 2012, with weak growth persisting in 2012, Sobel said.
He added that Europe's problems were a serious risk for the U.S. economic outlook and said that President Barack Obama and Treasury Secretary Timothy Geithner were actively engaged with European counterparts to help them deal with the crisis.
Sobel also repeated Obama administration's views that stronger European countries must do more to contain the crisis on their own.
As European countries act to develop critical economic reforms and to strengthen fiscal governance, Europe must also continue mobilizing the requisite resources to put in place a strong and credible firewall commensurate with the scale of the challenge, he said. It must do so quickly, with force and determination.
While the International Monetary Fund can play a role in easing the crisis, the IMF cannot substitute for a strong and credible European firewall and response, he added.
(Reporting By David Lawder; Editing by Theodore d'Afflisio)