Europe's debt crisis remains a far bigger threat to the world's economy than the "fiscal cliff", according to the Organisation for Economic Co-operation and Development (OECD).
In its latest report, the economic think-tank says an escalation in the ongoing European crisis could drag Europe into a deep recession in the next two years and the US along with it.
The report comes as politicians in Washington are increasingly focussed on the fiscal cliff - the year-end expiration of wide-ranging tax cuts and the imposition of draconian spending cuts. The crisis has rattled investors and business leaders around the world.
A series of reports from the Congressional Budget Office and the White House have emphasised the threat the fiscal cliff poses as Europe's woes seem to have dropped off Washington's agenda.
OECD chief economist Pier Carlo Padoan said the US budget spat posed significant threats to the US and the global economy but said that Europe presented a larger challenge.
"We believe that the European crisis represents the largest risk to the global economy," he said. Padoan said an escalation in Europe's fiscal problems threatened "the global economy, including the US".
According to OECD calculations, the eurozone should return to growth next year while the US should grow at 2% next year and close to 3% in 2014. But an "intensified euro area crisis" would wipe out growth in Europe, plunging the economy into a deep recession. It would also wipe out the US recovery, causing a shallow recession.
Padoan said the "worst-case scenario" was for a fresh crisis in Europe and a collapse in the fiscal cliff talks. But he added that both crises represented opportunities for politicians. "The common element is that there is the possibility for policymakers to take defensive action. There is lots of room for upside scenarios," he said.
The economist said that businesses were increasingly uncertain about the future. "The cause of that is policy uncertainty both in the US and Europe," he said.