Garrett-Cox: Investors should fear the US more than Europe

Katherine Garrett-Cox, CEO and CIO of the £2.5bn Alliance Trust, has argued global growth will remain stagnant next year, as the US faces the strong prospect of slipping back into recession.

With investors mainly focused on the eurozone debt crisis, the potential implications of the US falling off its fiscal cliff are being largely underplayed by the market,Garrett-Cox said. The potent combination of tax increases and bulkier spending cuts coming into effect from next January could knock 3% to 4% off GDP, she said. “It could be argued the US is now an even scarier place than the eurozone, given maturity issues are going to run out and the Bush tax cuts programme is also coming to an end,” said Garrett-Cox. “The expulsion of the tax cuts and spending increases could knock ...