The turmoil surrounding the US debt ceiling hike is adding to economic uncertainty around the world. This was stated by the managing director of the World Bank, David Malpass, at the summit of the G7, the group of seven rich countries, in Japan.
According to Malpass, the global economy is already weakening due to rising interest rates, which is holding back investment. The risk of insolvency by the US government therefore creates even more uncertainty, according to the CEO of the World Bank. “It is clear that the turmoil around the world’s largest economy will be bad for everyone.”
Earlier, US Treasury Secretary Janet Yellen urged Congress to raise the government’s debt ceiling by $31.4 trillion to avoid an “unprecedented default”. This, she said, would trigger a global economic recession, undermining US economic leadership.
The debt ceiling is the maximum amount of debt the US government can take on by law. President Joe Biden wants Republicans, who have a majority in the House of Representatives, to agree to raise the debt ceiling without further conditions. Economists believe the Treasury will run out of cash within months if the cap isn’t lifted.
UK Chancellor of the Exchequer Jeremy Hunt told the G7 summit it would be “absolutely devastating” if the US failed to reach an agreement on the debt ceiling. According to him, the US economy could be “blown off course” as a result. The International Monetary Fund (IMF) has also expressed its concern about the debt ceiling deadlock.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
