By Max Clarke

President Obama last night announced an agreement between Republicans and Democrats on the mounting US debt crisis, delaying possible default.

The new deal, which has to be approved by Congress, will see the US maintain its AAA credit rating. Financial markets across the world have risen, as investors fearful of the possibility of a default, which would likely have plunged the world back into recession, have been reassured.

Raising the debt ceiling will also be matched by public spending cuts of more than $1tn in an unprecedented move towards austerity.

Many Republicans oppose the deal, claiming $1tn in cuts over a decade does not go far enough towards controlling public debt, whilst Democrats also compromised.

"This isn't the greatest deal in the world. But it shows how much we've changed the terms of the debate in this town," Obama said, quoted in the BBC.

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