Theo Walcott’s cool fifth-minute finish from Alexis Sanchez’s pass put the Gunners in control at the interval – but the second half brought a familiar painful fate for manager Arsene Wenger and his players.
It bolstered City’s title ambitions, although they are still seven points behind leaders Chelsea and completed a damaging double for Arsenal as they now lie nine points behind Antonio Conte’s side.
Manchester City needed their main man when they trailed at half-time – and in the absence of the suspended Sergio Aguero that role is assumed by De Bruyne.
And how the Belgian responded, delivering a virtuoso second-half performance crowned by that superb pass that led to Sterling’s winner.
De Bruyne was the driving force behind City’s second-half transformation that saw Pep Guardiola’s team wrestle control from Arsenal with a change of tempo and intensity that was simply too much for Arsenal to resist.
The same could not be said for Arsenal’s elite players and the main culprit was Mesut Ozil who, as in the fierce atmosphere of Goodison Park on Tuesday, shrank from the occasion and wandered around aimlessly and ineffectively on the game’s periphery.
Ozil is in the middle of what are likely to be very lucrative contract negotiations. Performances like this will diminish his hand in the bargaining rather than strengthen it.
City simply had to beat Watford and Arsenal, the stakes even higher after Chelsea stretched their lead to nine points with victory at Crystal Palace on Saturday.
A draw was no use to either side here – so the notion of defeat was even more unpalatable.
City were on the brink as they were behind at half-time but Guardiola responded by sending on Bacary Sagna for Pablo Zabaleta and Sane, who had been out on the wing, was soon racing through to score from a central position.
It was a win City needed desperately and its importance was illustrated by the celebrations at the final whistle.
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