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US Fiscal Cliff the Most Pressing Global Economic Issue

The Fiscal Cliff in the US is the most pressing issue that could affect the global economy in the near term, George Osborne, the UK’s Chancellor of the Exchequer, said Tuesday.

Mr. Osborne warned that the “Cliff” could have a negative effect on the global economy, but, he expects a resolution to the problem in the coming weeks or months, he said during a speech in New York hosted by the Manhattan Institute for Policy Research.

US political leaders remain at odds over how to avoid a combination of automatic spending cuts and tax increases that would go into effect in Y 2013 and likely drive the US into recession.

One issue that has been hanging over global markets for most of the year is the questions about whether Greece would exit the Eurozone, that is no longer a concern, Mr. Osborne said.

It is “pretty clear” euro-one leaders do want Greece to stay in the common currency bloc after rumblings early in the year questioned whether that was the right move, Mr. Osborne said.

“I do not think anyone doubts their intention” anymore to keep Greece in the Eurozone, Mr. Osborne said.

Greece just received another round of bailout funds from EU officials after completing a debt buyback and restructuring earlier in the month. Standard & Poor’s upgraded Greece to B- Tuesday, after placing the country in selective default amid the debt restructuring.

To survive, the currency union needs to further integrate its banking and fiscal policies, Mr. Osborne said. He also said the Eurozone is making progress on that front.