The U.S. needs to raise its debt limit and avoid default so as not to derail economic recovery around the world, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today.
“There’s no schadenfreude,” Rehn said in an interview with Sara Eisen for Bloomberg Television on the sidelines of the International Monetary Fund’s annual meetings. “In Europe we are very concerned about that because it would hit Europe very hard as well.”
U.S. policy makers should pursue “success and responsibility” to head off the consequences of a continued fiscal deadlock, Rehn said.
EU policy making won’t be slowed by German Chancellor Angela Merkel’s efforts to put together a coalition government after Sept. 22 elections, Rehn said when asked about the banking union effort aimed at breaking the link between the euro area’s financial companies and its sovereign debt crisis.
“I am sure there will be a new government in Germany in due course, in the course of maybe November or the latest early December,” he said. “That will not hamper or delay European decision making.”
Across the EU, nations need to avoid complacency and press ahead with economic and budget reforms, Rehn said. For example, Italian Prime Minister Enrico Letta is now in better position to follow through with needed actions, he said.
“In Italy, the political situation has been now clarified and the Letta government can provide not only political stability but I trust also a stronger capacity of taking decisions on badly needed economic reforms to boost growth and employment,” Rehn said.