The shape of a deal to avert the US fiscal cliff is at last emerging, with at least $1tn in new taxes, up to $1tn in fresh spending cuts and an increase in the debt ceiling, as negotiators scramble to reach agreement before the end-of-year deadline.

Barack Obama, US president, and John Boehner, Republican speaker of the House of Representatives, held their third face-to-face meeting in eight days at the White House amid signs of growing momentum in the talks. If they strike a deal in the coming days, and are able to pass it through Congress, it would remove a huge cloud of uncertainty hanging over the global economy.

Failure to avert the fiscal cliff – a combination of $600bn in annual automatic tax hikes and spending reductions by the government starting next year – would probably tip the US into recession next year, a prospect that has alarmed global investors and the American public.