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Tuesday 23 September 2014

EU faces 25 years of stagnation: Soros

Jesse Westbrook

Published 13/03/2014 | 02:30

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George Soros
George Soros

Billionaire investor George Soros said Europe faces 25 years of Japanese-style stagnation unless politicians pursue further integration of the currency bloc and change policies that have discouraged banks from lending.

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While the immediate financial crisis that has plagued Europe since 2010 "is over", Europe still faces a political crisis that has divided the region between creditor and debtor nations, the 83-year-old warned. At the same time, banks have been encouraged to pass stress tests, rather than boost the economy by providing capital to businesses, he said. Europe "may not survive 25 years of stagnation," Mr Soros said. "You have to go further with the integration. You have to solve the banking problem, because Europe is lagging behind the rest of the world in sorting out its banks."

Mr Soros, pictured right, whose hedge-fund firm gained about 20pc a year on average from 1969 to 2011, has been a constant critic of how the European currency bloc was designed and of budget cuts imposed on indebted nations such as Greece and Spain at the height of the crisis. He said more "radical" policies were required to avoid a "long period" of stagnation.

European bank shares are "very depressed," making it an "attractive time" to invest. Still, he said it is going to be a "very tough year" for lenders as they try to shrink balance sheets and boost their capital to pass the European Central Bank's stress tests.

Soros Fund Management, the hedge-fund firm that Mr Soros turned into a family office three years ago to manage only his personal wealth, made $5.5bn (€4bn) of investment gains last year, said LCH Investments. (Bloomberg)

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