Will US fall off the fiscal cliff?

US

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Carl Stick, manager of the Rathbone Income fund, considers whether the fiscal cliff will derail the weak US economic recovery.

Fiscal imbalances in the US remain a huge worry. Arguably, markets are putting their heads in the sand, as equities recover versus more expensive asset classes. We, however, are more circumspect. Data this year has not been too bad, but the fiscal cliff looks like the tip of a bigger problem. The US still has major long-term debt issues and, in the short term, it is not generating enough tax revenue. Without the political will to cut taxes or welfare, how will it finance its expenditure? At every level, it could be political suicide to make any difficult decisions between now and the ...

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