EU Parliament chief warns of fiscal cliff impact on world economy

(WASHINGTON) - European Parliament president Martin Schulz on Wednesday urged US lawmakers to strike a deal to avoid a fiscal cliff, warning a new recession in the US would hurt economies in Europe and elsewhere.

"The euro problems are already a strong burden for the world economy," Schulz said in Washington ahead of talks with Senate leader Harry Reid and top Senate Republican Mitch McConnell.

The looming tax hikes and massive spending cuts that could drag down the US economy present an "additional burden," he said, adding that a swift solution of the budget row between Republicans and Democrats is in Europe's interest.

"The US was always admired by Europeans for their pragmatic approach", said Schulz, who on Monday also met with US House Democratic Leader Nancy Pelosi.

"Now we see this ideologically heated atmosphere."

Republicans and Democrats have sharply differed on what kind of long-term spending reductions and increases in tax revenues should be put in place to replace the cliff that looms at the start of the new year.

US President Barack Obama has vowed that any deal he concludes would have to include an increase in taxes on wealthy taxpayers, something congressional Republicans have so far rejected.

Republicans insist raising taxes on the wealthy would be counter-productive and only slow economic growth. They stress that higher taxes would dampen spending and hiring and investment by business owners.