Eleventh hour deal averts a shutdown in US

PRESIDENT Barack Obama and congressional leaders reached a last-minute agreement just before a midnight deadline on Friday to slash about $38 billion (£23bn) in federal spending and avert the first US government shutdown in 15 years.

Obama hailed the deal as "the biggest annual spending cut in history". John Boehner, Republican speaker of the House of Representatives, won an ovation from his rank and file when he said that over the next decade it would cut government spending by $500bn.

"Today, Americans of different beliefs came together again," Obama said from the White House Blue Room, a setting chosen to offer a clear view of the Washington Monument.

Amid the biggest clash yet between Democrats and the resurgent Republicans who control the House, Obama had warned that a shutdown would damage the US economy's recovery by putting an estimated 800,000 government employees out of work.

The political consequences of a shutdown were huge ahead of next year's presidential and congressional elections. In the last government shutdown, during Bill Clinton's presidency, Republicans got the upper hand - but there was no assurance that would have happened again.

Since taking control of the House in January, Republicans have vowed to slash spending and curb the federal deficit. Democrats accused Republicans of wanting to cut vital government services and pushing a social agenda, while Republicans said Democrats weren't serious about cutting spending.