WASHINGTON — President Joe Biden and top Republican Kevin McCarthy are due to meet at the White House on Monday for talks on lifting the US debt ceiling.

The pair spoke on the phone on Sunday as the president was traveling back from the G7 summit in Japan.

The two sides remain at odds over budget cuts demanded by the Republicans as a condition for raising the ceiling. The debt ceiling is a spending limit set by Congress which determines how much money the government can borrow.

Failure to raise it beyond the current cap of roughly $31.4 trillion (£25.2 trillion) by June could result in the US defaulting on its debt.

That would mean the government could not borrow any more money or pay all of its bills. It would also threaten to wreak havoc on the global economy, affecting prices and mortgage rates in other countries.

As he left Japan on Sunday, Biden told reporters that proposals by Republicans — who control the House of Representatives — were “simply, quite frankly, unacceptable”.

He added: “It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely on their partisan terms. They have to move as well.”

But Biden also said he would be willing to cut spending to reach a deal.

The president canceled foreign visits that were due to follow the three-day summit in Hiroshima, in order to deal with the impasse over the federal debt.

McCarthy earlier described his call with Biden as productive.

“I think we can solve some of these problems if he understands what we’re looking at,” he told reporters following the pair’s conversation.

On Sunday night, negotiators met at McCarthy’s office on Capitol Hill for a summit that lasted around two-and-a-half hours.

Steve Ricchetti, one of Biden’s representatives and a senior adviser to the president, told reporters that the negotiating teams would continue to work overnight.

Meanwhile, Treasury Secretary Janet Yellen said on Sunday that June 1 remained a “hard deadline”. She told NBC that without a deal “we expect to be unable to pay all of our bills in early June”.

Failure to lift the ceiling could see the US suspend its social insurance payments and the salaries of federal and military employees.

The impasses have rattled financial markets. On Friday, the Dow ended down 0.3%, the S&P 500 dipped 0.1% and the Nasdaq slipped 0.2%.

In exchange for support for raising the debt ceiling, Republicans are demanding budget cuts to the tune of $4.5 trillion (£3.61 trillion) which include scuppering several of Biden’s legislative priorities. They are also seeking increased spending on the military and border security.

Both President Biden and McCarthy are under pressure from the left and right flanks of their respective parties to hold the line.

With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House, a deal has so far proven elusive. — BBC