NEW YORK, Dec 9 (Reuters) - The Bank of England is concerned that U.S. fiscal policies are creating economic difficulties without any longer-term benefits, its governor said on Monday, weighing in as lawmakers in Washington scramble to avoid another government shutdown.
BoE Governor Mark Carney, speaking on PBS’s “Charlie Rose” show, said “kicking the can” on U.S. tax and spending decisions “doesn’t do anything to fix the longer-term fiscal problems, entitlement, and other problems in the United States.”
A budget impasse led to a partial U.S. government shutdown in October, while at the same time global financial markets braced for a possible U.S. debt default. On Monday, congressional aides said a deal could emerge in Congress on Tuesday that aimed to avoid a January shutdown.
There are still some “big, tough decisions” for U.S. lawmakers next year, Carney, the Canadian who took the helm of the BoE in July, said according to a transcript of the PBS interview. “So what concerns us the most is the system can create very difficult short-term situations without a longer-term benefit.”
Both the U.S. and world economies are vulnerable to decisions made in Washington. While the U.S. economic recovery has picked up steam with decent job growth in recent months, Britain has had a surprisingly strong recovery since the start of the year, overtaking its euro zone peers on economic growth.