Cowley: Expect sterling crisis if coalition abandons austerity

Old Mutual Asset Managers' head of fixed income Stewart Cowley has predicted a sterling crisis could unfold if the coalition government relaxes its austerity drive.

Speculation has been mounting in recent weeks that Chancellor George Osborne will lower his deficit reduction target when he delivers his autumn statement on 5 December. Osborne is attempting to reduce the deficit to £120bn from £121.bn in the current tax year, but many economists believe the Chancellor will fall short, given total government spending has soared 3.7% to £52.5bn year-on-year. Cowley (pictured), said the coalition must keep its fiscal plan on track, warning sterling will reverse sharply if austerity measures are eased. "Sterling will come under attack if we abandon o...