Last updated at 13:17 GMT, Wednesday, 02 January 2013

US 'fiscal cliff'

Summary

31 December 2012

US Congressional leaders have one more day of negotiations to stop steep tax rises and spending cuts, known as the 'fiscal cliff', after talks ended with no deal.

Reporter:
Andrew Walker

US Capital, Washington DC

President Obama returned early to Washington DC, from his Christmas holiday, to try to work out a solution.

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The big concern about the standoff in Washington is that the economy could go back into recession if the tax increases and spending cuts go through. Any damage could be moderated if the measures are partly reversed in the next few months, but there are reports suggesting that there has already been some impact on business investment and jobs.

Some differences between President Obama and the Republicans in Congress have narrowed, on income taxes, for example. But they are not resolved and there remain major divergences over how to stabilise the US government finances.

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Vocabulary

standoff

a situation in which agreement does not seem possible

recession

a period when the economy of a country is not successful

go through

(of a law, plan or deal) officially accepted or approved

moderated

reduced; limited

measures

actions which are intended to achieve a particular goal

reversed

made something become the opposite of what it was

impact

the powerful effect that something, especially something new, has on a situation or person

resolved

solved a problem or difficulty

divergences

differences

stabilise

make something become fixed or stop changing

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