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US shutdown could hurt France, rest of world, minister warns

An American civil servant protests at the shutdown on Capitol Hill
An American civil servant protests at the shutdown on Capitol Hill Reuters/Larry Downing

The US government shutdown is a threat to the economies of France and other US trade partners, Finance Minister Pierre Moscovici told the weekly French cabinet on Wednesday. European Central Bank (ECB) boss Mario Draghi also warned that the deadlock could be a danger to the whole world if it drags on.

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The shutdown could "put the brakes on" the fragile recovery of the French economy, Moscovici told ministers on Wednesday morning, government spokesperson Najat Vallaud-Belkacem reported.

Dossier: Eurozone in crisis

"It seems that in fact each day of deadlock leads to a big financial loss to the country and therefore consequences for its partners," Vallaud-Belkacem said.

The French government, which has pledged to reverse the upward rise of unemployment by the end of the year, expects growth this year to be a meagre 0.1 per cent but hopes it will rise to 0.9 per cent in 2014.

Although the latest official figures showed a drop in unemployment, even after allowing for a computer error, ministers are cautious about promising that will continue.

Some economists say that growth of 1.5 per cent is needed to reverse the rise in joblessness.

The ECB's Draghi warned on Wednesday that a prolonged shutdown would be "a risk for the US and the world" but said he believed that the head-to-head between right-wing Republicans and US President Barack Obama would not last beyond the 17 October deadline.

Obama has cancelled a planned trip to Malaysia and the Philippines next week because of the crisis.

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