Kevin McCarthy, the top Republican in the US, and President Joe Biden spoke on the phone in an effort to change the tone of the stalled discussions on raising the US debt limit.

McCarthy stated that his conversation with Biden on the return from the G7 Summit in Japan had been "productive", and that the two would be meeting on Monday.

Both sides are still at odds about the budget cuts that the Republicans demand as a precondition for raising the ceiling.

If you fail to comply by June, the US could default on its debt.

This would mean that the federal government couldn't borrow any more money or pay its entire bill. Treasury Department warned that default could start on 1 June.

This would lead to chaos in the financial markets and further increases in interest rates.

Biden, who left Japan Sunday, told reporters that the Republican-controlled House of Representatives proposals were "simply and quite frankly unacceptable".

He added: "It's time for Republicans to accept that there is no bipartisan deal to be made solely, solely on their partisan terms. They have to move as well."

But Mr. Biden said he was willing to reduce spending in order to reach an agreement and that he'd speak to Mr. McCarthy as he headed home.

The president canceled foreign visits that were due to follow the three-day summit in Hiroshima, in order to deal with the impasse over the federal debt.

After the call, Mr. McCarthy told reporters the discussions had been positive. "I think we can solve some of these problems if he understands what we're looking at," he said.

On Sunday night, negotiators met at Mr. McCarthy's office on Capitol Hill, with the summit lasting for around two and a half hours.

Steve Ricchetti, one of Mr. Biden's representatives and a senior adviser to the president, told reporters that the negotiating teams would continue to work overnight.

Meanwhile, Treasury Secretary Janet Yellen said on Sunday that 1 June remained a "hard deadline". She told NBC that without a deal "we expect to be unable to pay all of our bills in early June".

Failure to lift the ceiling could see the US suspend its social insurance payments and the salaries of federal and military employees. Default also threatens to wreak havoc on the global economy, affecting prices and mortgage rates in other countries.

The impasses have rattled financial markets. On Friday the Dow ended down 0.3%, the S&P 500 dipped 0.1% and the Nasdaq slipped 0.2%.

In exchange for support for raising the debt ceiling, Republicans are demanding budget cuts to the tune of $4.5tn (£3.61tn), which includes scuppering several of Mr. Biden's legislative priorities, while also seeking increased spending on the military and border security.

The White House has called the Republican proposal "a blueprint to devastate hard-working American families", although it has indicated that it may make some budgetary concessions.

Both President Biden and Mr. McCarthy are under pressure from the left and right flanks of their respective parties to hold the line.

With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House, a deal has so far proven elusive.

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