US billionaire investor: Risk of European double-dip recession

| June 16, 2010 | 0 Comments
US billionaire investor: Risk of European double-dip recession

Speaking at a banking conference in Vienna recently, US multi-billionaire investor George Soros said a double-dip recession cannot be ruled out.

A so-called double-dip recession, whereby the economy goes into recession twice without having undergone a full recovery in between, is almost inevitable in Europe next year, as credit problems are forcing European countries to increase fiscal consolidation at a time when recovery is fragile, according to 79-year-old Soros.

He told the conference that the euro zone debt crisis could have the potential to destroy the 27-nation European Union.

He said: “By imposing fiscal discipline at a time of insufficient demand and a weak banking system, by wanting to have a balanced budget you are actually … setting in motion a downward spiral.

“Germany is going to smell like roses but (the rest of) Europe is going to be pushed into a downward spiral, stagnation lasting many years and possibly worse than that,” he added.

“In other words, I think a recession next year is almost inevitable given the current policies,” Soros said - later confirming he meant a recession in Europe as a whole.

Mr Soros is renowned for his role as a currency speculator and was described as “the man who broke the bank of England” after betting against the British pound.

Last week, it was announced Finland’s economy entered recession again after contracting for a second quarter in a row.

The economy experienced a 0.4% decline in the January to March and a 0.2% fall in the October to December period last year.

Finland, which joined the euro zone on January 1 2002, has been hit hard by the global economic downturn, which weakened demand for key exports like paper and mobile phones.

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