Europe financial crisis poses significant risks to US economy: Bernanke

US Federal Reserve Chairman Ben Bernanke has warned that the worsening European financial crisis poses “significant risks” to the US economy.

“The crisis in Europe has affected the US economy by acting as a drag on our exports, weighing on business and consumer confidence, and pressuring US financial markets and institutions,” Bernanke told the US Congress Joint Economic Committee on Thursday.

“The situation in Europe poses significant risks to the US financial system and economy and must be monitored closely… The Federal Reserve remains prepared to take action as needed to protect the US financial system and economy in the event that financial stresses escalate,” he added.

Bernanke also named mandated budget cuts and tax hikes as two other potential shocks that keep the US economy vulnerable.

He said that the Federal Reserve is ready to protect the economy if it weakens, without signaling any imminent step by the US central bank to aid the country’s economy.

The comments by the Fed chief come as the US economy is grappling with financial difficulties including housing problems and lower-than-expected employment growth.

Meanwhile, Fitch Ratings warned on Thursday that if the US does not come to grip with its own budget deficit, it will risk a cut in its AAA rating.