US warned on debt rating by S&P

The US has been warned that the credit rating on its government debt could be cut by Standard & Poor’s.

S&P is concerned that Democrats and Republicans will not be able to agree a plan to reduce the growing US deficit.

The agency has downgraded its outlook from stable to negative, increasing the likelihood that the rating could be cut within the next two years.

The US Treasury responded that S&P had underestimated its ability to tackle the national debt.

The surprise move sent US stocks and bonds lower.

The US federal deficit currently stands at $1.4 trillion (£858bn) and is expected to reach $1.5 trillion in the current fiscal year.