US economy: Bernanke calls for urgent action

Action to address the looming tax rises and spending cuts in the US is needed "sooner rather than later", the head of the Federal Reserve has said.

Central bank chairman Ben Bernanke told Congress that the changes, known as the fiscal cliff, could tip the US into recession if fully implemented.

He also talked about the risk to the US economy of the eurozone debt crisis.

Mr Bernanke was speaking to the Senate Banking Committee in his twice-yearly report on monetary policy.

The fiscal cliff refers to the expiry of Bush-era tax cuts and $1.2 trillion (£770bn) in automatic spending cuts.

"The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery," he told the committee in a prepared statement.

"Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence."

Mr Bernanke reiterated his concerns about the slow pace of the recovery and job creation and confirmed that the central bank's monetary policy-setting committee was "prepared to take further action as appropriate".