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German Finance Minister Warns of Global Economic Risk

Germany’s Finance Minister, Christian Lindner, has urged the United States to come to a “grown-up” decision on the talks to raise the federal debt ceiling. Lindner expressed his concern on the sidelines of the G7 summit in Japan, where finance leaders of the Group of Seven advanced economies are meeting to discuss issues, including how far they want to go in steps to counter China and how to support Ukraine and enforce sanctions on Russia.

Lindner’s warning came as a meeting between U.S. President Joe Biden and lawmakers scheduled for Friday in Washington was postponed. A deal is needed to raise the government’s debt ceiling to avert a catastrophic default. The German finance minister warned that politics was risky to stabilizing the global economy and financial market. He hoped that parties would not be swayed by short-termism or partisanship. He urged them to make a mature decision that is not dictated by party political considerations or short-term motives.

Lindner’s remarks underscore the fragility of the global economic outlook. He emphasized that a catastrophic default by the US could have adverse effects on the global economy. The German Finance Minister expressed hope that politicians in the US would consider the impact of their decisions on the global economy and take a responsible approach to managing the country’s finances.

Elaborating on what he meant by “grown-up,” Lindner said it was about reaching an acceptable decision that takes into account the long-term impact of the government’s finances on the global economy. Party political considerations or short-term motives do not drive it.

Meanwhile, Joachim Nagel, the chief of Germany’s central bank, the Bundesbank, said that the European Central Bank would continue to raise interest rates as inflation numbers remained high. Investors and market analysts closely watch the European Central Bank’s policy decision on interest rates as it significantly impacts the eurozone’s economic outlook.

Lindner’s remarks reflect the global concern over the impact of US debt ceiling talks on the global economy. It underscores the importance of taking a responsible approach to manage the government’s finances and the need for a mature decision that takes into account the long-term impact on the global economy. The G7 summit is an opportunity for finance leaders to discuss issues that affect the global economy and find ways to counter challenges that may arise.

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