German Finance Minister Christian Lindner hopes American lawmakers will be “mature” over the debt ceiling negotiations to avoid further headwinds for the global economy.
U.S. Congress is trying to find a compromise on the debt limit — which refers to the maximum amount of money that the two chambers allow the federal government to borrow. Democratic leaders want the limit to be raised but Republican lawmakers have called for spending cuts to be agreed before anything is approved.
Time is running out for an agreement, with U.S. Treasury Secretary Janet Yellen warning earlier this month that without a deal, the largest economy in the world could default by June 1.
“There is a high level of uncertainty, we have to stabilize the economic development, we have to further fight inflation and in this situation everyone has to be responsible, we have to avoid further risks, especially risks which are in our hands to decide on,” Christian Lindner, the German finance minister, said at the sidelines of a G-7 meeting in Japan.
“I cannot comment on domestic politics in other countries, but I hope everyone is mature in this situation and avoids further risks for the global economic development,” he told CNBC’s Martin Soong.
Speaking earlier Thursday at a press conference, also at the G-7 meeting, Yellen said a U.S. default would threaten the global economy. U.S. President Joe Biden had previously warned that differences with the Republican Party over the debt ceiling risk a recession.
“We have severe risks, a high level of uncertainty, we have still high inflation rates, we have not yet come back to the growth we need at the global level and so, in this situation, nobody would understand if domestic U.S. politics would cause further trouble for the global economy,” Lindner said.
Eurogroup President Paschal Donohoe also told CNBC at the G-7 meetings that this is a “vital” development for the global economy. “We appreciate how sensitive this issue is in American politics, but at the same time the resolution of this issue is vital, not just for America, but it also plays such a vital role in the economic stability of our world,” he said.