(MENAFN– ecpulse) Top European officials expressed concerns about the U.S. government shutdown, saying it could pose a risk for the continent`s fledgling recovery.
European Central Bank president Mario Draghi, the International Monetary Fund (IMF) Managing Director Christine Lagarde and other top European officials warned last week that the federal shutdown and debt ceiling turmoil are likely to have repercussions around the world, and in particular, on the recently-stabilizing Eurozone economy.
The U.S. government began a partial shutdown last week after the Republican-led House of Representatives and the Democratic-led Senate failed to agree on an emergency spending bill to fund the government.
As far as we’ve learned, lawmakers remain at dispute over the budget, with Democrats refusing to give in to Republican demands for cuts in President Barack Obama`s healthcare act (Obamacare).
The current crisis comes few weeks before a mid-October deadline over raising the government`s $16.7 trillion borrowing ceiling.
ECB President Mario Draghi has warned that the shutdown of the U.S. government could threaten not only the world’s largest economy, but also the global economy if it continues.
Draghi said that the government shutdown could become dangerous if it dragged out but was confident a fix would be found. The federal government shutdown "is a risk if it is protracted, it would be a risk not only for the US, but also the world economy," he said last week.
Meanwhile, IMF Managing Director Christine Lagarde said it would be critical for the U.S. to raise the borrowing limit as a default would damage the world economy.
In France, Finance Minister Pierre Moscovici told a cabinet meeting that the U.S. budget blockage could slow down recovery in France.
If the U.S. shutdown dragged on it would likely throw the global financial markets into chaos!
The U.S. Congress also needs to find a deal on raising the country`s debt ceiling later this month, if it doesn`t, the country would face a potential default on its debt, a development that could inflict massive damage on the global economy.
The single currency reversed course to upside against the dollar last week, rising as high as $1.3645 on Thursday, However, the upcoming days may unfold some unexpected swings, as traders are pricing in every whisper coming out of the Washington.
As long as the euro continues to confirm stability above 1.36 areas, the upside movement towards 1.37 and perhaps 1.38 areas might be quite possible, but still further confirmation is needed at his time, given the pair was last trading in high-range of 1.35.
As a consequence, mixed vibes are more likely to dominate the European markets, and especially equities, as traders scrabble for fresh clues on the U.S. federal shutdown before the debt clock ticks any louder!
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