US president Barack Obama warned that the US economy could head into a “double-dip recession” unless steps were taken to rein in mounting public debt.

His remarks are the strongest yet on the necessity of putting public finances back on a sound footing.

“It is important though to recognise, if we keep on adding to the debt, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a double-dip recession,” said Mr Obama.

A 10.6 per cent plunge in housing starts in October – led by collapse in the apartment business – highlighted the dilemma facing Mr Obama as he seeks to tackle the deficit. – (Copyright The Financial Times Limited 2009)