Jack Lew: Debt Ceiling Won't Be Reached Until Labor Day

Jack Lew
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Jack Lew

U.S. Treasury Secretary Jack Lew told CNBC on Friday that the U.S. debt ceiling would not be reached until September, though he said it was not an excuse for Congress to relax.

"The debt limit will be reached in just a few days when it expires on May 18 but because of the cash flows we can predict that we will be okay until Labor Day," Lew told CNBC in an interview in London.

"People shouldn't relax, Congress should deal with this right away. The uncertainty caused by putting this off is not good. The anxiety caused to the U.S. and world economy by putting this off until the last minute is not good," Lew said on the sidelines of a meeting of G-7 finance ministers and central bank governors.

The two-day meeting, which began on Friday, is expected to address whether policymakers can do more to encourage a fragile global recovery .

Lew forecast that in the coming 12 months the global economy would continue its recovery but, he said, it required a global, concentrated effort.

"The economy is healing—certainly in the U.S., I think that there are many challenges ahead and in a meeting like this [G-7] one, it's an important time to ask the question what we can all do to create more growth and more jobs."

Lew added that Europe needed to do "a little bit better" in stimulating demand and creating economic growth, stressing the region should balance austerity measures with efforts to boost growth.

"I've been engaging with the Europeans since I've become Secretary. … We feel strongly that there needs to be the right balance between austerity and growth. We're not arguing whether we need to get our fiscal house in order, we all need to do that, the question is when and how."

"Some countries have more 'fiscal space' to create demand and create growth," he said. "We've seen progress on the easing off of certain deficit deadlines and the making of structural reforms and we need to see more of that."