President Obama  blames a huge fiscal deficit on the Bush regime, following the Clinton administration and outlined plans in Washington yesterday to balance the books within 12 years.

This requires cuts of around US$ 4 trillion that will be achieved by:

• Reducing Defence spending
• Cancelling tax breaks for the rich
• Reductions to healthcare programme that provides some medical support for the poor and elderly
• Lowering the amount of debt the US has that is currently on target to hit US$1 trillion in interest payments by the end of the decade

Final agreement on the Budget will take place at the end of June.

The worry is that the level of cuts, not unlike the situation in the UK, will tip the US back into recession and this would have implications for the global economy, markets being closely linked in so many ways.