NIIGATA, Japan, May 13 (Reuters) – Britain’s Chancellor of the Exchequer Jeremy Hunt said on Saturday it would be “absolutely devastating” if the United States fails to reach a deal to raise its debt ceiling and see its GDP “disrupted”. Gross Internal.
Hunt told reporters the Group of Seven (G7) finance chiefs had “very frank and open discussions” in Japan about the challenges they face, including banking regulation and the impact of Russia’s war on Ukraine in the world economy.
The standoff between President Joe Biden and the Republican-controlled House of Representatives, which has raised the prospect of a US debt default, poses a “very serious threat to the global economy,” Hunt said.
“It would be absolutely devastating if the United States, which is one of the biggest engines of the world economy, saw its GDP thrown into disarray by failing to reach a deal,” he said, adding that he hoped Biden and Congress could resolve their differences.
Hunt said G7 officials also discussed the impact of Western sanctions on Russia over its invasion of Ukraine, and talked at length about the need to end sanctions evasion.
He argued that it was clear that the economic sanctions on the Russian economy had not been as effective as the military support for Kiev, but rather were creating “a slow burn” and that there would come a time when Western pressure “would start to take its toll.” “.
Hunt said it was very important that the non-G7 countries invited to the meeting by Japan – India, Indonesia, Brazil, Singapore and Comoros – participate in the debate on Russia.
A key area of agreement was that the rich G7 countries want to “de-risk” relations with China, rather than disassociate themselves from all trade, Hunt said, noting Britain’s “strong view” is that it is necessary avoid an approach that would inadvertently return the world to “protectionism”.
“No one is talking about not trading with China, not exporting to China, not importing from China, but we have to make sure that we don’t have dependencies that could make us vulnerable,” he said, adding that the hard part was coming up with the concrete steps needed to achieve that. .
The G7 members also agreed that any country resorting to economic coercion should expect a united response from advanced democracies, but did not elaborate on what that would entail.
Hunt, speaking before meeting US Treasury Secretary Janet Yellen, said that one disappointing thing had been the inability of G7 members to convince more developing – or Global South – countries to support the unified Western response to the Russian invasion, and that more soul-searching was needed on that front. (Reporting by Andrea Shalal; Writing by Kantaro Komiya; Editing in Spanish by Ricardo Figueroa)