Soros sends a chill wind blowing round Davos

Published on Wednesday 23 January 2008 20:53

AS THE world's biggest economy cools by the day, snow fell in the picturesque Swiss town of Davos yesterday as world business and political leaders gathered for the first day of the annual World Economic Forum.

And there was cold comfort from billionaire investor George Soros, who warned that recession in the UK and the US will now be difficult to avoid.

He said: "Markets have been left to their own devices and the authorities came to rely on the markets to right themselves.

"They ought to have known better. They ought to know that the markets don't necessarily right themselves. "

A year ago, Davos attendees predicted that the economy would move ahead with confidence. But after the credit crisis brought on by massive exposure to subprime mortgage securities, the mood instead is sombre. US economist Nouriel Roubini summed up the mood. "It's not about a soft landing or a hard landing," he said, "but rather how hard a landing it will be."

The outlook for the global economy was the main talking point as leaders argued over whether a recession was likely to spread around the world.

Economists from Asia and the US and government ministers from India and China were united in their view that the US economy remained on a downward course, but were divided about whether it could drag them into a recession.

Yu Yongding, director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said: "If there is a tremendous slowdown in the US economy, then we must be worried about it."