IMF warns of 'major' consequences of US debt default

The International Monetary Fund (IMF) has warned of the consequences of the prolonged political standoff in the US, in its World Economic Outlook - its biannual assessment of the global economy.

"Failure to lift the debt ceiling would be a major event. Prolonged failure... would almost surely derail the US recovery," said IMF economic counsellor Olivier Blanchard.

"But the effects of any failure to repay the debt would be felt right away... leading to potentially major disruptions in financial markets both in the United States and abroad."