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US reach agreement on raising US debt ceiling

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by Kay Mitchell

US President Barack Obama has announced Republican and Democratic leaders have come to an agreement on raising the Government debt ceiling to avoid defaulting on its debt.

“I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy,” the US President said.

However, both parties will hold further discussions today before the agreement is drafted into legislation that can be put to a vote.

The deal will be welcomed across the globe after there were fears that the US defaulting on its debt could have caused a “major crisis”, according to Chairman of the Federal Reserve.

Meanwhile, under the proposed agreement, the US debt ceiling would rise by up to $2.4 trillion, while planned spending cuts of a similar amount will be introduced.

Despite the agreement, the country’s prized triple-A credit rating is still at risk of being downgraded.

Meanwhile, following the announcement, stock markets in Asia rose between 1.3% and 1.7%.

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News posted: August 1, 2011

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