British Prime Minister David Cameron and French President Nicolas Sarkozy have discussed the eurozone and US debt crises in telephone talks, a Downing Street spokesman has confirmed.
There have also been reports that the council of the European Central Bank will hold a conference call meeting tomorrow to talk about problems in the eurozone.
Finance ministers from the G7 countries have also been holding top-level discussions over the weekend.
With markets now homing in on government debt rather than banks, analysts are predicting major turbulence following the US ratings downgrade by Standard & Poor's.
Italy, which along with other major economic power Spain faces threats of being engulfed in euro turbulence, is raising the possibility of G7 ministerial talks ‘in a few days’ to address the burgeoning crisis - with Britain, Canada, France, Germany, Japan and the US.
Meanwhile, the White House have called for an end to the political gridlock blamed for the US credit rating downgrade as allies voiced confidence in the world's largest economy.
Standard & Poor's cut the US rating for the first time in history on Friday, by one notch from its top-flight triple-A to AA+, saying US politicians were increasingly unable to manage the country's huge fiscal deficit and debt.
The agency added a negative outlook, warning there was a chance the rating could be downgraded further within two years if progress is not made in balancing the country's lopsided finances.
Stinging rebuke
Washington's allies in Europe and Asia rallied behind the US, warning against over-reaction to the downgrade, but China, the largest foreign holder of US Treasuries, slammed the US ‘addiction’ to debt.
In a stinging English-language commentary carried by the official Xinhua news agency, China said it had ‘every right’ to demand Washington address its structural debt problems and safeguard Chinese dollar assets.
‘To cure its addiction to debts, the US has to re-establish the common sense principle that one should live within its means,’ it said.
Other Asian nations such as Japan and South Korea reacted cautiously and, along with Australia, warned against over-reaction.
Russia and France said they were untroubled by the rating slip, and Britain's Business Secretary Vince Cable called it ‘entirely predictable’.
The White House reacted to the downgrade by calling for unity, following the acrimonious months-long partisan battle to secure a deal on raising the US debt ceiling and slashing the deficit, a feud that rattled world markets.
‘We must do better to make clear our nation's will, capacity and commitment to work together to tackle our major fiscal and economic challenges,’ White House spokesman Jay Carney said in a statement.
‘The bipartisan compromise on deficit reduction was an important step in the right direction. Yet, the path to getting there took too long and was at times too divisive,’ Mr Carney said.
S&P said late Friday the ‘political brinksmanship’ of recent months shows that governance in the country is becoming ‘less stable, less effective, and less predictable,’ raising the risk that it may one day default on its debt.
Government monitoring situation
Meanwhile, a Department of Finance spokesperson said the Government was carefully monitoring the situation in financial markets, and that Ireland was on the periphery of this crisis and would work with its EU partners to find a credible and workable solution.
The spokesperson said the Government was aware that significant challenges remained for the Irish economy, but that by focusing on sustainable public finances, ensuring the banking sector is fit for purpose and implementing reforms to support growth, Ireland could overcome these challenges and return to robust economic growth over the medium term.
Fianna Fáil's Finance Spokesman Michael McGrath has said all European parliaments should be recalled so that measures agreed at July's eurozone Summit meeting can be approved and fully implemented as quickly as possible.
He said such a move would restore confidence on the markets and be a sure sign that Europe is determined to get to grips with the crisis once and for all.
