US 'careening towards bankruptcy' warns DeSantis as debt ceiling vote looms

A handful of hard-right Republicans said they would oppose the deal to raise the $31.4 trillion (£25.5 trillion) debt ceiling, highlighting the dangers of the US suffering a "catastrophic" default.

Conservatives have criticised the agreement between Joe Biden and House Speaker Kevin McCarthy for falling short of the deep spending cuts they wanted.

Meanwhile, liberals have bemoaned policy changes such as new work requirements for older Americans in the food aid programme.

Florida Governor Ron DeSantis, a candidate for the Republican 2024 presidential nomination, said the deal does not do enough to change the fiscal trajectory.

He told Fox News: "After this deal, our country will still be careening toward bankruptcy."

President Biden said he "feels good" about the debt ceiling deal which will be considered by the House Rules Committee this afternoon before a vote on sending it to the full House for a vote expected Wednesday.

US Treasury Secretary Janet Yellen has warned of the "catastrophic" consequences of a deal not being passed, which could mean the US runs out of money as soon as June 1 and could default on its debts.

Overnight, Asian stocks lost early gains as relief that a possible default has been averted gave way to fears over the compromise.

The package still has to be approved by the Republican-controlled House of Representatives and Democratic-controlled Senate before the debt limit is reached, likely by next Monday.

"The US had a poor resolution to the debt ceiling negotiations with still a huge increase in government debt and no real cuts to spending, but (it) has relieved pressure for now," said James Rosenberg, an adviser at broker Ord Minnett in Sydney.

"There's still a huge disconnect between bond markets and equities. The bond market is implying there is an extreme 70pc probability on a US recession in the next year. These signals stand in stark contrast to the resilient equity market."