London ( CNN ) -- In 2011 UK Business Secretary Vince Cable lamented that a bunch of `` right-wing nutters '' was holding the American government and the world economy to ransom by refusing to agree the usually routine increase in America 's legal debt limit . World leaders might avoid the blunt description used by Cable but their thoughts are probably very similar . The U.S. is , once again , having another political gunfight over public funding and debt issues . Internationally , America 's fiscal shenanigans could be particularly harmful for eurozone countries trying to get their own public debt problems under control and strengthen their economic recovery . Instability in the world money markets is the last thing that the likes of Greece , Ireland , Spain and even France need . And with the UK economy excessively dependent on its financial sector , the storms in Washington could turn into a tempest for the City of London . If the U.S. imbroglio results in a debt default next month , it will serve as a very bad example to eurozone countries undergoing austerity to remedy their indebtedness . READ MORE : How austerity kills . One political consequence of this may be the growth of nationalist/populist parties in Europe who seize on America 's conduct to legitimize calls for default on their own countries ' public debts . Nothing new . There is nothing new in the standoff between the Republican House and the Democratic Senate over agreeing a budget to fund government operations for the 2014 fiscal year , beginning October 1 . Whether single party controlled or not , Congress has failed to pass a budget by the start of the new fiscal year annually since 1994 . However , it has always approved a Continuing Resolution to fund government operations until a budget is agreed . If this is not settled by midnight today , the U.S. government will experience a partial shutdown that will hit `` non-essential services '' ( including federal payment of government contracts , social security benefits and the like ) . There have been ten such shutdowns since 1981 . All but one of these only lasted a weekend when most government offices were closed anyway . The exception , in late 1995-early 1996 , went on for 26 days . READ MORE : 10 ways a shutdown will affect you . We may be re-entering the same territory because Republican insistence on defunding Obamacare as part of any budget deal is staunchly opposed by the Democrats , reinforced by the threat of a presidential veto if any such measure were enacted . All this may look like a local infighting but the possible consequences could be global in scope if the stand-off continues until mid-October , when the U.S. is scheduled to raise its debt limit . The ceiling for borrowing was actually reached last May . The U.S. Treasury has been shuffling money from government accounts to pay America 's creditors ever since , but the pot is now close to empty . The U.S. is looking down the barrel at the first default in its history . If this happens , the very least of the consequences will be a reduction of its credit rating by Standard & Poor 's ratings agency , along with others . The fact that U.S. government creditors are mainly foreign governments and central banks may prevent panic on the money markets , but there will still be serious repercussions and dislocations stretching throughout Asia , Europe , and Latin America . Global money flows . Even with a brief default , the U.S. government will probably find it more difficult thereafter to sell short-term Treasury notes at low interest to fund its operations . The likely consequence of this would be greater reliance on medium- term and long-term borrowing that could require higher interest rates to be attractive . READ MORE : What happens at the White House ? At a time when the Fed is still operating an easy money policy to boost recovery from the Great Recession , it may have to raise interest rates contrary to its expansionary preferences , with harmful consequences for the American and global economies . If U.S. interests rate interest rates go up , America could become a magnet for global capital , leaving the European countries , in particular , short of credit needed to sustain their own economic recovery . The more likely scenario is that a default will be avoided , but the fear that one was imminent and the worry that it could easily happen again this time next year is bound to make the money markets nervous . Foreign creditors willingly lend to the U.S. because it is a safe bet in an uncertain world . But if its dysfunctional politics makes it look unsafe , they may look elsewhere . The U.S. is fortunate that the euro is not a reserve currency in waiting , as it looked a decade ago , and the Chinese renminbi is nowhere near ready to challenge the dollar . But what the world needs now is more certainty from its largest borrower and owner of its reserve currency . Without this , there could be very damaging repercussions for global economic growth .
The U.S. is facing up to yet another battle over its public funding and debt . Iwan Morgan says this is nothing new -- but its impact on international markets is a worry . Money markets will get nervous at the continued dysfunction in U.S. politics . The eurozone is only just emerging from recession and certainty is needed .