Senior Treasury department officials have issued their starkest warnings yet that if Congress does not quickly raise the US’s debt limit to avoid a default, investors will punish the country and further damage its fiscal position.

“We are talking about a unique and fragile asset of the US – the full faith and credit idea,” Neal Wolin, deputy Treasury secretary, told the Financial Times. “And certainly in the current context of the global recovery and other headwinds, this is not something we can afford to let happen, or to let people think might happen.”

In a letter to Michael Bennet, the Colorado senator, on Saturday, Tim Geithner, Treasury secretary, warned that if the US halted, curbed or delayed payments to contractors, employees and bond investors, there would be a “massive and abrupt reduction in outlays and aggregate demand”.