BRUSSELS: European Central Bank president Jean-Claude Trichet warned on Sunday that governments that have borrowed billions to fight the economic crisis had no room for more debt and would have to start bringing down budget deficits.

Trichet said the large injection of funds in an effort to stimulate European economies had been the right response, but said there was a need to get public finances back under control as soon as possible. “This is a moment where you can’t spend any more and can’t accumulate any more debt,” Trichet told Europe 1 radio.

“We are in exceptional circumstances,” he said, adding financial markets and consumers had to be convinced that budgets would return to normal.

ECB has slashed interest rates to shore up a battered economy, though a rate of 1 per cent is higher than in the US or Britain.

Although the eurozone was not at the core of the freezing up of financial

markets in the autumn of 2007, its banks held vast amounts of toxic assets and countries heavily dependent on exports, have plunged into recession as world trade collapsed.

But Trichet said there was now agreement that the bloc’s economy would be showing clear signs of recovery by 2010 if the appropriate action was taken.

“We will have growth coming back again and so we have to begin the operation that consists of moving progressively towards balance,” he said, referring to budget deficits.

Trichet said the unprecedented actions taken by central banks had restored confidence to money markets that were almost crippled by the shock of the Lehman Brothers’ collapse.