Fiscal policy could prove fatal for sterling

The debate about UK fiscal policy in the countdown to this year’s general election is critical to the outlook for monetary policy, the economy, Britain’s sovereign rating, financial markets and sterling. Last week the debate cranked up a gear when a letter signed by 60 economists, including George Magnus, appeared in the UK newspaper the Financial Times arguing that tightening fiscal policy before the economy had found its sea legs again and was able to withstand the shock of budgetary cuts