Shanghai Daily: Business - shanghaidaily.com
FALLOUT from the United States housing slump may affect European economic growth, European Central Bank board member Christian Noyer said yesterday. In the strongest warning yet from an ECB official that the 13-nation euro area is at risk from the US subprime mortgage drop, Noyer said optimism among consumers and executives in the economic outlook is already deteriorating. "There may be a question mark over our hopes that Europe could decouple" from the US, Noyer told the Euromoney Euro Fixed Income Forum in Paris yesterday. The US housing recession has made banks reluctant to lend to each other, pushing up borrowing costs around the world, said Bloomberg News. Credit conditions have worsened in the past three weeks as more than US$50 billion of writedowns linked to defaults on mortgages stoke concern about the strength of financial institutions. Noyer said banks will be exposed to a "triple shock" of unwanted growth in their balance sheets, higher costs of