US PRESIDENT Barack Obama continues to have meetings with congressional leaders aimed at preventing a US default.

Unless a $14.3tn (£8.9tn) borrowing limit is increased by next Tuesday (August 2), the US government may run out of money to pay its bills, the US Treasury has warned.

The turmoil follows reports that the US was spending far more than it earned through taxes.

To raise the borrowing limit, the US government needs the permission of Congress, an issue the Republican-controlled house refuses to okay unless the Democrats agree to major spending cuts.

President Obama has warned that time is running out to reach a solution, but the Republicans have rejected his proposals to increase taxes for wealthier Americans to raise funds, saying that by doing so would suppress investment and job growth.

In his weekly national address, President Obama said all Americans had to play their part in resolving the crisis, saying: “We're all in this together. The truth is you can't solve our deficit without cutting spending”.

The US government currently owes $4.6 trillion.

If the government runs out of money, it may stop paying wages to staff, which includes the military and social security cheques.

The situation could also cause turmoil on international markets.