Official figures show that the economy has been growing strongly over 2014, expanding by 0.9 per cent between April and June after 0.7 per cent growth in the previous quarter.
However, in an interview with the BBC, Osborne said: "The eurozone risks slipping back into crisis and Britain cannot be immune from that - it's already having an impact on our manufacturing and exports.”
The German economy, which is Europe’s largest, contracted by 0.2 per cent in the second quarter of the year, while the eurozone’s growth was flat.
Meanwhile, UK manufacturing growth - a closely watched indicator of economic health - fell to just 0.1 per cent in August.
Below, we look at the funds which performed best during previous periods of economic slowdown in the UK, although please remember that past returns are no guarantee of future performance.
The UK economy suffered a steep slowdown in the summer of 2007, when the aftermath of the financial crisis saw GDP fall from 1.2 per cent to a quarterly contraction of 2.1 per cent by the end of 2008.
Over this time the FTSE All Share plummeted 32.47 per cent as investors across the globe fled risk assets but fund managers fared even worse.
The average fund in the IMA UK All Companies sector lost 36.06 per cent, while losses in the IMA UK Equity Income averaged 33.88 per cent.
Performance of index and sectors over downturn
Source: FE Analytics
But FE Analytics shows some fund managers were able to protect their investors’ money from the worst of the market falls.
Out of the two UK sectors, the £1bn Newton UK Equity fund - which is managed by Paul Stephany but was under the charge of Christopher Metcalfe at the time in question - lost investors the least with a fall of just 11.78 per cent.
Since Stephany took over in March 2013, it has returned 8.99 per cent, beating the All Share’s 7.70 per cent but underperforming the sector’s 9.74 per cent.
Metcalfe is now co-manager on the £1.4bn Newton Managed and £1.9bn Newton Higher Income funds.
The fund has a bias to mega and large gaps, which reduces its sensitivity to changes in the economic cycle.
It also makes use of its ability to invest up to 20 per cent of the portfolio outside the UK, with 18 per cent currently held in international equities.
Newton UK Equity, which sits in the IMA UK All Companies sector, has a clean ongoing charges figure (OCF) of 0.79 per cent.
According to FE Analytics, Trojan Income is the fund in second place with a loss of 14.86 per cent.
The fund was also flagged up for its downside protection by the FE Research team, which awarded it a maximum of 100 points in this category in a recent income study.
The £1.75bn fund is built around a cautious investment approach, with FE Alpha Manager Francis Brooke preferring predictable businesses that are able to generate sustainable levels of cash.
It tends to hold around 45 names, compared with an average of around 70 for the IMA UK Equity Income sector.
It holds five FE Crowns and appears on the FE Research Select 100 list of recommended funds.
The FE Research team says: “Brooke says that the fund is a bit boring, which is not a problem if it means steady returns and low volatility. He does not look for tremendous performance in market rallies, but is more concerned about preserving investors’ capital in real terms, adjusted for inflation – a foundation of Troy’s investment process.”
Trojan Income has clean ongoing charges of 1 per cent.
Performance of funds vs index over downturn
Source: FE Analytics
FE Alpha Manager John Wood’s £1.4bn JOHCM UK Opportunities fund, which is also five FE Crown-rated and a Select 100 member, lost 16.72 per cent over the downturn.
The portfolio favours stocks which derive most of their earnings from outside the UK.
Neil Woodford's £1.4bn SJP UK High Income, Stephany's £353.8m Newton UK Opportunities and the £2.7bn Majedie UK Equity fund, managed by Adam Parker, Chris Field, James de Uphaugh, Matthew Smith and Richard Staveley, all lost less than 20 per cent during the sharp economic downturn and market crash.
However, the events of 2007 and 2008 were extreme to say the least.
The economy was plunged into recession and the stock market tanked massively; there is no suggest from Osborne that we are currently on the brink of a similar situation.
So we also looked for funds which outperformed in a milder downturn - between the fourth quarter of 2003 and the final one of 2004, when GDP went from 1.2 per cent expansion to zero.
Performance of index and sectors over downturn
Source: FE Analytics
Fund managers constantly point out that there is no explicit link between economic growth and the stock market and, as the graph above shows, the FTSE All Share managed to climb in this environment, while funds performed broadly in line with it.
During this time, Jim Fisher and Craig Yeaman's £29m Saracen Growth was the best performer with a return of 39.24 per cent.
It has a clean OCF of 1.78 per cent.
This fund is currently first quartile over one and three years but has had a tougher time over recent periods, sitting in the fourth quartile over three and six months.
However, the fund has a high exposure to small and micro caps, which may not suit investors who feel more comfortable with businesses further up the cap spectrum for their defensive exposure.
The £722.8m Artemis UK Growth fund, managed by Tim Steer and Paul Casson, made 30.3 per cent over the period in question.
At the time it was managed by Adrian Paterson but still manages to hold up well in sell-offs under its current managers.
The fund’s largest sector bet is on industrial goods and services at 17.6 per cent of the portfolio, followed by personal and household goods at 8.6 per cent and retail at 7.8 per cent.
Steer and Paul Casson had been holding elevated levels of cash over the summer but have started to put this to work by increasing positions in existing holdings.
Artemis UK Growth has a clean OCF of 0.82 per cent.
Performance of funds vs index over downturn
Source: FE Analytics
Other funds that held up during the 2004 downturn include George Luckraft’s £139.3m AXA Framlington Equity Income, Philip Wolstencroft's £384m Artemis Capital, Alex Wright's £2.7bn Fidelity Special Situations, although this was managed by Anthony Bolton, and Nigel Thomas' £4.3bn AXA Framlington UK Select Opportunities.
