US faces credit rating cut as threat of default looms

Standard and Poor's has joined Moody's in warning the United States that its AAA credit rating could be cut in 90 days unless the government resolves a stalemate on the issue of raising the amount the country allows itself to borrow.

The US currently has until August 2 to raise government borrowing limits, or else it will default on scheduled debt repayments. This, according to S&P, would be "significant", and would result in them "lowering the long-term and short-term ratings on the US".

Congress has voted through an increase in the US debt limit ten times in the last ten years. But this year, with the country running a $1.5 trillion budget deficit, Republicans have demanded spending cuts in exchange for increasing the limit.

Democratic president Barack Obama has proposed plans that would see $4tn cut from the national deficit over the next ten years, but Republicans have rejected it because it calls for tax hikes.

S&P said that there was "an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling".

Read a full report at BBC News. ·