US & Canada

Congress votes to extend US borrowing limit

US Capitol in Washington DC (30 Dec 2012)
Image caption The bill was approved in the House of Representatives last week

The US Congress has voted to extend the nation's borrowing limit until the middle of May.

The Senate's 64-34 vote gave final approval to a bill that must now be signed by President Barack Obama.

The Republican-controlled House of Representatives passed it last week by 285-144.

The Treasury had warned it would reach its $16.4tn (£10.3tn) debt limit in late February or March, and Congress must authorise it to borrow more money.

Experts say the passage of the bill would allow the government to borrow about $450bn to pay interest on its debt, and meet obligations such as Social Security and government salaries.

Some Republicans had previously threatened not to pass an increase in the debt limit unless it was paired with spending cuts.

The White House signalled last week it approved of the short-term measure that would avoid the prospect of default.

The debt limit extension comes one day after figures showed the US economy unexpectedly shrank at an annualised rate of 0.1% in the last three months of 2012.

Less than a month ago, Congress and the White House struck a last-minute deal to stop a combination of sharp spending cuts and tax increases from taking effect - measures that would have damaged the fragile economy.

The last debt ceiling battle between Congress and Mr Obama ended in July 2011, after bringing the nation close to default and resulting in a credit rating downgrade as well as financial market turmoil.