The political deadlock in Washington on whether and how to increase the United States' debt limit is causing anxiety over a possible default and a new global economic downturn.

The deepening of the eurozone's debt crisis (though the European Union has agreed to bail out Greece for the moment) has been more than matched by the growing fear that the US administration would default on its bills from Aug 2.

Long negotiations have taken place between US President Barack Obama, and the Democrats and Republicans to avert a partial closing down of the federal government. The US at present has a limit of $14.29 trillion for its federal debt. This limit will be reached by Aug 2. Congress has to approve the raising of the debt limit before then, or else the Obama administration will have to defer meeting some of its financial commitments.