The US has failed to agree a budget for the first time in 17 years, causing the shutdown of many state-funded businesses and impacting 800,000 workers.
It is not known how long the deadlock between the two houses of Congress will last, but it has been estimated that a shutdown of three weeks could reduce the country’s GDP by 0.9%.
The Republican-dominated House of Representatives refused to agree the budget unless President Obama delays his controversial healthcare reform plans.
Shortly after midnight, President Obama tweeted: "They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget."