(Reuters) - The United States took a step closer to losing its coveted triple-A credit rating over the weekend as a political impasse in Washington reduced hopes of an agreement to meaningfully cut the nation's budget deficit.
Although analysts still expect a last-minute deal to raise the U.S. debt ceiling and avoid a default next week, it seems unlikely that Democrats and Republicans will agree before the next election in November 2012 how to find $4 trillion (2.45 trillion pounds) through government spending cuts and revenue increases.
Prospects of a budget breakthrough faded as lawmakers missed a self-imposed deadline to produce a deal by the time Asian markets opened for the new week. They still plan to outline proposals on Monday, but both sides appear further apart than ever.
Moody's, Standard & Poor's and Fitch have said they will downgrade the U.S. credit rating if failure to raise the nation's $14.3 trillion debt ceiling leaves the Treasury without cash to service its debt obligations in August.
But, at this point, raising the ceiling is not enough to safeguard the triple-A rating.
The ratings agencies have said the top-notch U.S. rating will only be safe if they see a credible plan from Congress and President Barack Obama to address the country's growing debt burden.
S&P would likely be the first to remove the triple-A status -- a move that could raise borrowing costs for Americans for generations to come, with Moody's and Fitch expected to follow, though perhaps not immediately.
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http://uk.reuters.com/article/2011/07/25/uk-usa-debt-downgrades-idU...