Managers braced for impact of severe spending cutbacks

The UK's new coalition Government is preparing to make large-scale spending cuts in an attempt to reduce the country's worryingly large Budget deficit, and managers are bracing themselves for the possible impact.

"The markets will want the coalition to act hard and early, and anything else will spell trouble for gilts and sterling," he says. "We are giving the coalition the benefit of the doubt right now - we own sterling and we own gilts. The recent rise in corporate bond spreads provides an excellent entry point for those who missed the rally earlier in the year." John Hamilton, manager of the Jupiter Corporate Bond fund, agrees the market wants to see decisive action. "Credible action by the UK Government would be likely to enhance its position as a recipient of safe-haven flows during p...