A government shutdown is looming after Republicans in Congress failed to pass a cut spending bill on Thursday. The potential shutdown could hit Christmas travel and deal a blow to the U.S. economy, just a month before Donald Trump returns to the White House.

Lawmakers must make a last-minute effort to strike a new deal before Friday’s midnight deadline — otherwise all non-essential government functions will be halted.

Here we answer some important questions about government shutdowns:

What causes a government shutdown?

A U.S. government shutdown occurs when Congress fails to fund the federal government by a certain deadline, in this case midnight on December 20th.

More specifically, provisions of a law known as the Antideficiency Act, first passed in 1884, prohibit federal agencies from spending or obligating funds without an act of appropriation—or an alternative form of authorization—from Congress.

Congress this week only announced a stopgap measure to keep the government open. On Tuesday, House Speaker Mike Johnson unveiled a bipartisan agreement extending state funding through March. It included aid for farmers, hurricane relief and a small raise for members of Congress.

But President-elect Trump and his billionaire ally Elon Musk have scuttled that deal, including by spreading falsehoods about the original plan. Trump called for suspending — or even eliminating — the federal debt ceiling.

Friday is the last day to pass a new federal budget before a government shutdown would begin.

Can the USA still avert a shutdown?

With no clear path forward after the Trump-backed proposal failed to pass on Thursday night, the US appears to be on the brink of a shutdown. But with members of Congress eager to leave Washington for the holidays and Republicans wary of being accused of shutting down critical federal operations days before Christmas, there is a strong desire to avoid a prolonged shutdown.

“We’re expecting votes this morning, so stay tuned everyone,” Johnson said Friday morning. “We have a plan.”

Asked whether he had reached a new agreement, the speaker replied: “We’ll see.”

Both chambers of Congress – the Republican-controlled House of Representatives and the Democratic-controlled Senate – must approve the measure. Leaders have the ability to move a measure quickly through the legislative process, but with such narrow margins, any plan that lacks bipartisan support risks being derailed by a handful of defections.

Even if a deal is reached by Friday morning, it is possible that funding will be delayed for a period of hours while Congress approves the bill and sends it to Joe Biden’s desk for his signature.

What happens if there is a US government shutdown?

Thousands of federal government employees are being furloughed, meaning they will not be allowed to report to work and will not receive pay for the duration of the shutdown. Your salaries will be paid retroactively after expiry.

Other government employees considered essential services, such as air traffic controllers and law enforcement officers, will continue to work but will not be paid until Congress votes to end the shutdown.

Depending on how long it takes, national parks may either close entirely or reopen without certain vital services such as public toilets or attendants. Passport processing may stop, as may research at national health institutes.

How unusual are government shutdowns in the US?

In the first 200 years of the USA’s existence, this did not happen at all. In recent decades, however, they have become an increasingly integral part of the political landscape as politics in Washington have become increasingly polarized and risky action has become an everyday political tool. There have been 20 federal funding gaps since 1976, when the U.S. first pushed back the start of its fiscal year to Oct. 1.

Three shutdowns are particularly notable in U.S. political lore:

• A 21-day partial shutdown in 1995 due to a dispute over spending cuts between President Bill Clinton and Republican Speaker Newt Gingrich is widely seen as setting the tone for later partisan battles in Congress

• In 2013, the government was partially shut down for 16 days after another Republican-led Congress tried to use budget negotiations to scrap Barack Obama’s signature Affordable Care Act, commonly known as Obamacare

• A 34-day standoff, the longest on record, lasted from December 2018 to January 2019 when Trump refused to sign a budget proposal that did not include $5.7 million in funding for a wall along the U.S. border with Mexico billion US dollars. The shutdown damaged Trump’s poll numbers

How could a shutdown affect the overall economy?

It depends on how long the shutdown lasts. A shutdown lasting hours would likely have minimal impact. But a day-long shutdown during one of the busiest travel seasons of the year could lead to costly delays and disruptions. Meanwhile, Medicare and Medicaid applications could take longer to process, and federal workers who don’t receive a paycheck could spend less this holiday season. And depending on the severity of the shutdown and the associated political consequences, it could send the stock market into turmoil.