Fiscal cliff: US urged to tackle budget deficit

US politicians have been urged to do more to sort out the budget by the two largest credit rating agencies.

The warning comes despite the US narrowly agreeing a deal to stave off the US "fiscal cliff" of spending cuts and tax rises worth $600bn (£370bn).

Rating agency Moody's said lawmakers would need to take additional steps to lower the ballooning budget deficit.

Rival agency Standard and Poor's added: "Washington's governance and policymaking had become less stable."

The deficit has topped $1tn in each of the past four years. Moody's said that if it failed to cut the deficit, the government's top credit rating could be at risk.

The fiscal cliff measures - $536bn of tax rises and $109bn of spending cuts - had been due to come into effect at midnight on Monday, but Congress agreed a deal to avoid the worst of the measures late on Tuesday.