U.S debt limit increased by Senate

U.S debt limit increased by Senatebigstock-Us-Capitol-resized

Senate has passed a bill to raise the U.S debt limit for another year after a majority vote of 55-43. The bill narrowly cleared the House of Representatives and now goes to the President to sign into law. It comes after warnings that the country could default at the end of February if action is not taken.

Under the bill the debt limit will remain at $17.2tn (£10.4tn) but will be extended to 15 March 2015, giving the government more funding for its debt and budget management.  Because of America’s dominance in the global economy, any default on its public debt would have catastrophic ramifications, something that both the IMF and White House were keen to avoid.

President Obama said, “I’m pleased that Republicans and Democrats in Congress have come together to pay for what they’ve already spent, and remove the threat of default from our economy once and for all.”

With less opposition in the American political system there is more opportunity to strengthen the national economy and continue the positive recovery in terms of employment and GDP. The Republicans have repeated used their majority in the House to try and win policy battles over the debt limit and federal budgets, creating the political impasse, but this has been put to one side and will now make development much easier in the current unstable climate.