In the US, President Barack Obama has backed a bipartisan proposal made by the so-called ‘Gang of Six’, which includes three Republicans and three Democrats, to reduce the US deficit by $3.7 trillion over the next 10 years.

The proposal includes $500 billion in immediate cuts to deficits and creates a framework for further fiscal reforms.

Such reforms would involve a ‘fundamental reform’ of the country’s tax code and would include fewer tax deductions and close loopholes for individuals and companies, but also cut marginal income tax rates.

This plan, if approved by Congress, would pave the way for a rise in the debt ceiling.

In the eurozone, growth in the manufacturing and services industries in the euro area slowed more than expected in July.

This was due to a drop in demand from abroad coupled with and the region’s ongoing sovereign debt crisis weighing on consumer spending.

The flash Purchasing Managers’ Index (PMI) in the manufacturing sector dropped to 50.4 from 52.0 in June. This was less than the 51.5 expected by economists and was also the lowest level since September 2009.

The PMI for the area’s dominant services sector fell to 51.4 from the 53.7 registered in June. Expectations were for a reading of 53.0.

This data continues to add to evidence of a slowdown in the euro-region recovery.

In the UK, the minutes from the last meeting of the Bank of England’s monetary policy committee (MPC) continued to reinforce the view that interest rates are not likely to be raised any time soon.

The minutes also acknowledged that the economy’s soft patch “would persist for longer than previously thought”, with the bank saying that growth in the second quarter was likely to be “modest” and that the outlook for the third quarter had darkened.

Policymakers also said inflation was likely to peak higher and sooner than previously expected.

While no mention was made of the possibility of more quantitative easing, the MPC said monetary policy could change in either direction.

This article was compiled by Bank of Valletta plc for general information purposes only.