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Page last updated at 07:52 GMT, Tuesday, 2 August 2011 08:52 UK

Growth fears over US debt deal

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A deal to resolve the United States' debt crisis is expected to be approved by the Senate this afternoon, around 12 hours before the US Treasury estimates that the country will run out of money.

Last night the House of Representatives backed a bill to raise the country's borrowing limit by more than two trillion dollars, cutting spending over 10 years by around the same amount.

David Blanchflower, a former member of the Bank of England's Monetary Policy Committee who now works in the US, believes that, with many of the details still to be agreed, there is a danger the plan could further damage a struggling US economy.

"It's dealing with long run problems of deficit, and of course you have to do that, but the problem is you've got to get the economy growing again. And just like the UK economy, the US economy is slowing so this is a worry -- on the one hand you deal with the deficit but on the other hand you can't compromise growth," he told Today presenter Evan Davis

And that's the same problem in the UK and exactly the same problem you see in Ireland, Spain, Portugal and elsewhere -- you do austerity but that compromises growth."


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