Some of the largest US asset managers and pension funds issued an urgent warning over the country’s looming budget crisis, underlining concern in the markets of a damaging political stand-off in the event of a narrow election victory for Barack Obama.

Even as Mr Obama and Mitt Romney made their last pitches to voters ahead of today’s election, the investors called on Congress to do a deal to avert the “fiscal cliff”, $600bn in spending cuts and tax rises set to take effect on January 1 if changes to the law are not agreed. Such fiscal austerity could push the economy into recession next year, the Congressional Budget Office and the Federal Reserve have warned.

“America is facing an urgent crisis, barely discussed during the fall’s election campaign”, said the group of investors led by BlackRock and joined by pension systems from Florida, Utah, Texas and Illinois, in advertisements in leading US newspapers yesterday.