Cable — who on July 24 blamed "right-wing nutters" in the US Congress for delaying a deal — said the fact that an agreement was only reached at the last minute on Tuesday pointed to failures in the American political system.

"The whole process didn't reflect well on the US at all, and I'm sure it will have done lasting damage," Cable said in London.

"It's a relief in the sense that if they hadn't reached agreement, the effect would have been utterly catastrophic not just for the credibility of the US but for the Western economies and the world economy as a whole."

Asked if he thought that the US would still keep its triple-A sovereign debt rating, he said this was not clear, but stressed Britain looked in a better position.

"I don't know what the credit rating agencies will do, but it does suggest they (the US) do not have a very good process for dealing with public finance at a time when they need to," he said.

"And at the danger of being complacent, I'd say that our position in the UK, where we've got a stable government working over a five-year period to sort out the public finances, is a much better model than theirs."

Cable is a senior member of the Liberal Democrats, the centrist junior coalition partner to Prime Minister David Cameron's Conservative Party.

Cutting Britain's budget deficit — which totaled more than 10 percent of GDP last year — is a key goal for the coalition.