US debt crisis worries coalition figures
A partisan clash between Republicans and Democrats over the US' debt ceiling is being watched warily by ministers in London.
US president Barack Obama is attempting to win support for an increase in America's total amount of debt, which is currently limited at $1.3 trillion.
He is struggling to persuade Republicans to back the increase without dramatically accelerating the rate at which the US cuts its deficit. If a deal is not reached by the US, its treasury will not be able to pay its bills.
The crisis has prompted concern from coalition ministers about the impact which failure to reach a deal could have on the UK's own fragile economic recovery.
Quarterly GDP figures are out tomorrow which are expected to show a continuation of stagnant growth. The eurozone crisis is thought to have been a contributory factor to disappointing progress.
Justice secretary Kenneth Clarke said: "I think the icebergs are probably the worst in the lifetime of anyone now living and we did have some good news last week – we have had some very weak leadership in Europe, but at last they demonstrated they were able to reach a political decision.
"We are now waiting to see if the American political class can do the same thing in the next fortnight or so and if they don't do it by early August that is the next big iceberg coming towards us."
Yesterday business secretary Vince Cable told BBC1's The Andrew Marr Show: "The irony of the situation at the moment is that the biggest threat to the world financial system comes from a few right-wing nutters in the American Congress rather than the eurozone."
Mr Obama's administration has not yet reached agreement with Republican leaders, but is determined to avoid an embarrassing default.
"It's unthinkable that this country will not meet its obligations on time," treasury secretary Tim Geithner told CNN.
"It's just unthinkable we'd ever do that. It's not going to happen."