Investors predict policy action for US on brink of fiscal cliff

The Bush era tax cuts due to expire at the end of the year could send the US economy back into recession unless Congress intervenes, according to leading commentators.

High profile investors and economists say the end of the tax breaks, combined with the introduction of automatic spending cuts, could knock as much as 3% off 2013 GDP. Last week the Federal Reserve revised its GDP growth forecast for 2013 from 2.7%-3.1% down to between 2.2% and 2.8%, showing the economy remains vulnerable. In a research note, SocGen said the so-called ‘fiscal cliff’ is the most significant threat to growth in the world’s largest economy going into 2013. Senior US economist Aneta Markowska, the report author, said: “The biggest risk to US growth over the next four quar...