Obama's fiscal cliff worries post-re-election victory reflected in stock markets fall
President Barack Obama has returned to the White House facing an expected battle with Republicans over the nation's 'fiscal cliff', as stock markets on Wall Street tumbled on Wednesday.
Obama faces an urgent challenge to prevent the gridlock that scarred his first term as fears grew that politicians will fail to cut a deal to stop the economy falling over a 'fiscal cliff'.
More than 600 billion dollars of tax rises and cuts in government spending are due in early January.
Failure to avoid the cliff will plunge the world's largest economy back into a slump and disrupt the global economy's still fragile global recovery, the Telegraph reports.
Leaders in the Republican Party wasted little time in ratcheting up pressure on Obama to rapidly agree a deal that limits the scale of the austerity poised to hit in a matter of weeks.
Speaker John Boehner, who leads the Republicans in the House of Representatives and has spent the last year duelling with the White House, said that both sides needed to work together to reach a compromise.
According to the report, as Washington digested the outcome of one of the most bitter presidential election campaigns in recent memory, concerns were building that America and the rest of the world will have an anxious wait for the resolution of the fiscal cliff.
Obama has said he will not agree to anything that fails to lift taxes on those Americans earning more than 250,000 dollars.
The FTSE 100 closed down 1.6pc at 5,791.63. Markets in New York recorded even steeper falls, with the Dow Jones Industrial Average plunging almost 300 points, or 2.2pc, to 12,941.90 during the day.
"It's so damaging for the economy to have this continuous uncertainty hanging over it," Jens Nordvig, an analyst in New York at Nomura Securities, said.
According to the report, the fiscal cliff is an early litmus test of Obama's ability to both shepherd the economy and work with Republicans, two of the chief concerns of voters.
As he looks out at his second term, Obama also needs to break the gridlock on key domestic policy issues such as immigration reform and energy policy, the report said.