Economists are warning of dire consequences if US politicians fail to make progress this weekend in tense talks aimed at reducing America’s massive deficit ahead of a Wednesday deadline.

The bi-partisan congressional super-committee is charged with drawing up plans for a $1.2bn reduction in the nation’s deficit by the middle of next week. Failure to do so will trigger an automatic “sequester” that will make cuts of that size to defence and social welfare programmes starting in 2013. But the two sides seem far from finding a solution after clashing over tax revenues.

While Wednesday is the official deadline for the supercommittee to report back, it has until Monday to tell the Congressional Budget Office about the impact any plan they send to Congress will have on the budget.