Deadlock in talks to bring economy back from brink

(EPA)

Business Secretary Vince Cable launched an extraordinary attack on the US Republican Party yesterday, saying "right-wing nutters" were threatening to cripple the world economy.

Speaking on the BBC's Andrew Marr Show as President Barack Obama pressed on with torturous efforts on a deal to raise the US government's debt limit, Mr Cable said the row was a more serious crisis than the problems in Europe's single currency.

"The biggest threat to the world financial system comes from a few right-wing nutters in the American Congress rather than the eurozone," he said.

With just over a week left until a 2 August deadline that will see the US national coffers slip more than $14.3 trillion into the red – the maximum allowed – both parties are working around the clock to prevent a default.

Timothy Geithner, the US Treasury Secretary, repeatedly described it as "unthinkable" that either side would let the government run out of money to pay its bills, which would likely plunge world markets into a state of potentially catastrophic meltdown. The Republicans are fiercely opposed to tax rises. Democrats are hostile to cuts in government spending.

Obama's White House is currently endorsing what he calls an "extraordinarily fair" package that will see roughly three trillion dollars in cuts, combined with a tax increase of just under one trillion dollars. Republicans remain unconvinced.

Talks have been characterised by frequent walk-outs, along with endless "he-said-she-said" posturing. On Saturday, the White House urged both parties to "refrain from playing reckless political games with our economy".