The head of the International Monetary Fund has warned of the possibility of a global recession should the US default on its debt.

Talks are ongoing between Democratic and Republican leaders in the Senate but there are no signs of a breakthrough as yet.

In an interview with ABC's Meet the Press Christine Lagarde said America must now raise the debt ceiling before Thursday's deadline, saying: "If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession."

The president of the World Bank, Jim Yong Kim added that a US default could lead to a “disastrous event”.

Mr Kim added: “The closer we get to the deadline the greater the impact will be for the developing world. Inaction could result in interest rates rising, confidence falling and growth slowing. If this comes to pass it could be a disastrous event for the developing world and that will in turn greatly hurt the developed economies as well.”