Jeremy Hunt, the British finance minister, stated on Saturday that it would be “absolutely catastrophic” if the United States failed to reach an agreement to raise its debt ceiling and its gross domestic product was “thwarted.”
Hunt told reporters that Group of Seven (G7) finance chiefs had “very frank and open discussions” in Japan about the challenges they face, such as banking regulation and the impact of Russia’s conflict in Ukraine on the global economy.
Hunt stated that the impasse between President Joe Biden and the Republican-controlled House of Representatives, which has raised the possibility of the first-ever U.S. debt default, posed a “very grave threat” to the global economy.
“It would be absolutely catastrophic if the United States, one of the largest engines of the global economy, had its GDP derailed by failing to reach an agreement,” he said. He expressed optimism that Biden and Congress could resolve their differences.
Hunt reported that G7 officials discussed the impact of Western sanctions on Russia for its invasion of Ukraine, as well as the need to prevent sanctions evasion or leakage.
He stated that it was evident that economic sanctions on the Russian economy had not been as effective as military support for Kiev, but that they were causing a “slow burn” and that there would come a time when Western pressure “begins to bite.”
Hunt stated that it was crucial for non-G7 members invited by Japan to attend the meeting – India, Indonesia, Brazil, Singapore, and Comoros – to participate in the discussion about Russia.
Hunt noted that Britain’s “strong view” was the need to avoid an approach that inadvertently returned the world to “protectionism.” One key area of agreement was that the G7 wealthy countries want to “de-risk” their relations with China rather than decouple from all trade.