British finance minister Jeremy Hunt called a U.S. debt ceiling default “absolutely devastating” and a “knocked off track” GDP.
Hunt told reporters that Group of Seven (G7) finance chiefs in Japan had “very frank and open discussions” about banking regulation and Russia’s war in Ukraine’s influence on the global economy.
Hunt called a deadlock between President Joe Biden and the Republican-controlled House of Representatives. This might lead to a first-ever U.S. debt default, a “very serious threat to the global economy.”
“It would be absolutely devastating if America, which is one of the biggest motors of the global economy, was to have its GDP knocked off track by not reaching agreement,” he said. He hoped Biden and Congress could reconcile.
Hunt said G7 officials also discussed Russia’s invasion of Ukraine and the need to curb sanctions evasion.
He said economic restrictions on the Russian economy were “a slow burn” and would “bite” when Western pressure “starts to bite.”
Hunt said it was crucial that India, Indonesia, Brazil, Singapore, and Comoros, non-G7 nations invited by Japan, participated in Russia discussions.
Hunt said Britain’s “strong view” was to avoid a strategy that mistakenly restored the world to “protectionism” and that G7 rich countries want to “de-risk” relations with China rather than decoupling from all commerce.
“No one’s talking about not trading with China, not exporting to China, not importing from China, but we do need to make sure that we don’t have dependencies that can make us vulnerable,” he said, adding that the hard part was figuring out the steps.
G7 members also agreed that any country engaged in economic coercion should anticipate a united reaction from advanced democracies but did not specify how.
Hunt, who spoke before meeting U.S. Treasury Secretary Janet Yellen, said the G7’s failure to persuade more developing nations, or the Global South, to support the West’s unified response to Russia’s invasion was disappointing and required more soul-searching.
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