US and Japan facing debt difficulties

The world’s biggest and third-biggest economies?are both facing up to problems around debt. The US could face a fiscal crisis in the next few months after the?government hit its $31.4 trillion debt ceiling. At the same time, the Bank of?Japan has downgraded its economic outlook, shortly after Finance Minister Shunichi Suzuki warned that the country's?finances are becoming increasingly precarious.

The US Treasury has begun using “extraordinary measures” on cash management to try and hold off a debt default until 5 June. The country’s debt ceiling is a legal limit on how much the federal government can borrow. It is set by Congress and was extended to its current level in December 2021 following demands from the Democratic Party. That limit has now been hit following a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats on lifting the debt ceiling again.

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