15 Oct 2013

Signs of deal in government shutdown

12:57 pm on 15 October 2013

As day 14 of the partial shutdown of the American Government ends, there are signs policy makers could be reaching a deal over the fiscal crisis.

United States President Barack Obama and his Republican opponents had planned to meet on Tuesday morning to try to resolve their bitter dispute, which began with the Republicans wanting to de-fund the president's healthcare law but has now morphed into budget arguments.

However, the meeting has been postponed to give senators more time to work on a deal.

The two sides have to reach an agreement by Friday (NZ time) or the Government could run out of cash to pay its debts.

Senators are understood to be working on a deal that would raise the $16.7 trillion debt ceiling at least until mid-February and extend Government funding until mid-January.

Corporate bosses in the United States have been raising the pressure on policy makers to fix the crisis.

Expedia travel company chief executive Dara Karashahi says the crisis is hurting business as fears grow of another global financial shock.

"On the corporate side the one pattern that we are seeing is that we are seeing a lot of volatility and we aren't seeing corporate spend come back quite as strongly as you would expect," he says.

"So that tells me that corporations are fairly uncomfortable in this environment, and corporations need to feel safe as far as what the interest rate environment's going to look like, what the liquidity environment is going to look like, in order for them to invest aggressively, to grow as we have in the last couple of years."

Analysts say if a deal is not reached by Friday's deadline, business and consumer confidence will be seriously damaged, wrecking havoc of the global financial system.