Germans have been burning off the excesses of Christmas, taking a break from the woes of the euro zone debt storm.

But they shouldn't ignore America's race against the clock to stop itself sliding off the fiscal cliff.

With just hours to go, economists like IG's Brenda Kelly, say if the massive onslaught of tax hikes and spending cuts happens, it could strike a lethal blow to Europe's export markets.

SOUNDBITE (English) BRENDA KELLY, ECONOMIST, IG MARKETS, SAYING:

"There is no problem with regards to Europe itself. It needs to fund itself, it needs to export within itself but ultimately the main funding will come from the US and foreign investment from there as well so if we see a pullback, maybe 5 - 10 percent in their GDP growth over the coming years, then it will be problematic for Europe and in particular, Germany, which has ultimately done quite well diversifying its export sector away from Europe and America will be the one fly in the ointment if it does fall over the fiscal cliff"

Many of Europe's politicans support strict austerity when it comes to euro zone struggleers like Greece and Spain.

But they think America should keep borrowing to support global growth.

In her New Year address the German chancellor stressed the euro zone's problems weren't isolated.

(SOUNDBITE) (German) GERMAN CHANCELLOR, ANGELA MERKEL, SAYING:

"...there needs to be much more done on an international level to provide better checks and balances on the financial markets. The world hasn't sufficiently learned the lessons of the devastating 2008 financial crisis. Never again can we allow it to happen. In a social market economy, the state is the guardian of order - and that is something people should be able to count on."

European shares rose 16 percent in 2012 but they were down a fraction as the U.S deadline approached.

Justin Urquhart-Stewart, from Seven Investment Management, says the markets need to see confidence from the politicans.

JUSTIN URQUHART-STEWART, MARKETING DIRECTOR, SEVEN INVESTMENT MANAGEMENT, SAYING:

Although margins are going to be coming down from their peak - that was as good as it gets, probably last year - you're still going to see companies producing reasonable cash

positions, still paying dividends. So I'm actually relatively particularly optimistic, particularly if that mood music changes with the U.S sorting out its fiscal cliff, and continuing its growth - China showing stabilisation, starting to grow again more effectively, and then looking to Germany with its election to probably start seeing the move towards growth in the euro zone."

If the U.S senate doesn't agree Obama can still pass legisaltion to limit the damage.

But the last thing Europe needs is anything that will threaten its already difficult path towards growth.