Britain IS heading for a recession, warns billionaire investor George Soros, but Footsie soars in early trade

Britain and America are heading for a recesssion, one of the world's most powerful financiers said yesterday.

The bleak warning from George Soros follows a rollercoaster week on the financial markets demonstrated yesterday by the FTSE 100, which rose on Tuesday, falling again and the plunging Dow Jones rallying to finish up 300 points.

This morning, the FTSE 100 Index's rollercoaster ride took a new turn today as London's leading shares soared higher in early trading. With Asian stock exchanges also registering advances overnight, the Footsie opened more than 2 per cent, or 125.7 points, higher at 5735.

All eyes are now on the Bank of England to see how it will react to Tuesday's 0.75 per cent rate cut in America.

The most common view is that rates will fall next month from 5.5 to 5.25 per cent and 4.75 per cent by the autumn.

Mr Soros, best-known as the man who cashed in on the pound's withdrawal from the European Rate Mechanism on Black Wednesday in the 1990s, said a major downturn is on its way.

Asked on Radio 4's Today programme if a recession was looming, he replied: "I think it will be very difficult to avoid it."

Mr Soros, in Davos for the World Economic Forum - a meetingof top political and business leaders - said America's Federal Reserve had no option but to hit the panic button on Tuesday.

If it had not, he said, America could have risked a repeat of the 1930s Depression.

He was backed up by Nouriel Roubini of Roubini Global Economics and Stephen Roach of Morgan Stanley.

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Mr Roubini said the recession in America will be "severe" and could last a year. One consequence, he went on, could be sharp housing market declines in the UK, Ireland and Spain.

Mr Roach called the prospect of global recession a "close call" and attacked the U.S. Federal Reserve for failing to prevent a bubble from building in America's housing market.

Figures yesterday from the Office for National Statistics, showed growth in the economy is slowing.

GDP (gross domestic product) rose just 0.6 per cent in the final three months of last year, the slowest increase for over a year.