U.S. default would likely cause recession or 'worse' - IMF

WASHINGTON Tue Oct 8, 2013 2:53pm BST

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WASHINGTON (Reuters) - A default by the United States would like lead to a recession "or even worse," the chief economist at the International Monetary Fund said on Tuesday.

IMF chief economist Olivier Blanchard said a failure to lift the nation's debt ceiling would lead to dramatic cuts in government spending and "probably ... a lot of financial turmoil."

"I think what could be said is if there was a problem lifting the debt ceiling, it could well be that what is now a recovery would turn into a recession or even worse," Blanchard said.

(Reporting by Anna Yukhananov and Lucia Mutikani; Editing by James Dalgleish)