Tonight:
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Hopes rose tonight that the economy would soon be in recovery mode after a flurry of positive predictions from pundits including billionaire investor George Soros.
The influential Organisation for Economic Co-operation and Development tonight named the UK as one of the countries where the slowdown seemed to be steadying. It said Britain, France and Italy were showing “tentative signs” of a pause in the decline.
Economics teams at JPMorgan and Barclays Capital have both just predicted that recovery is in sight for the global economy, while Deutsche Bank today went as far as claiming that the recession in the UK could be over by next month.
However, it was the words of Soros which were causing most grounds for optimism this evening as he made the startling declaration that the global economy was pulling out of recession.
“The economic freefall has been stopped, the collapse of the financial system averted,” he said. “National economic stimulus programmes are starting to take effect. The downward dynamic is easing.”
His words marked a major U-turn for Soros, who only months ago was betting that the FTSE 100 index would fall. Today he predicted that the global economy would claw back about half of the downturn before a period of stagnation.
He was speaking shortly after George Buckley, chief UK economist at Deutsche Bank, said the British economy could start growing again in June.
Buckley's statement was the most bullish forecast any serious expert has given, and it fuelled hopes that worst of the slump is over and recovery is round the corner.
Wall Street analysts are predicting the US economy will begin growing again in the second half of the year, and China added to the drip-feed of encouraging news when its central bank said the country's output was holding up well.
Global markets have rallied and the FTSE 100 index is now well above its low of 3512 in early March — although it was down 42.39 to 4419.7 today.
Recent surveys in the UK have shown that the key planks of the economy — construction, manufacturing and services — suffered their biggest falls between November and February and have since started inching towards health.
Buckley said that, if the rate of improvement continued, “total output would be growing again by as soon as June and would be back to its average rate of growth by July”.
He said: “The green shoots' phraseology might need to be replaced with outright recovery'.”
But he added: “The big risk is you could see a W-shaped recession. We could see policymakers taking back some of the easing too quickly.”
The Bank of England, which this week gives its latest view of the economy in its quarterly Inflation Report, last week promised to increase the amount of money it will pump into the economy through quantitative easing from £75 billion to £125 billion.
Reader views (16)
This is the same man quoted saying he was having a very good recession. He says he makes money no matter which way the markets go.
If you folks could keep him on your side on the pond we colonist would sure appreciate it.
- James Andrews, sacramento, California USA, 12/05/2009 06:27
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George Soros has put large amounts of his massive wealth into funding various left wing causes. Since it is mainly left wing governments who have indulged in the type of economic stimulus to which he was referring it is not beyond the realms of possibility that Soros' statement is more prompted by his politics than it is by economics or financial likelihoods.
- Matt, London, UK, 12/05/2009 00:30
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I think Mr Soros has done too much gardening over the weekend and confused the green shoots of his plants with that of the economy!
With our Government in meltdown, printing money to line their pockets with prior to a soon departure (and you all believed they were putting it all to put back into the economy), this will throw the markets up in the air alone.
I'd love to know where all this quantative easing their putting into the markets is going as my business cash flow is like a dried up prune. I can't blame my clients as were all in the same position - the cash has not jet started to flow any easier and we all work in London!
Finally, house prices are still highly overflated.
Overall, I feel another hard reality shock coming to the markets and I think Mr Soros knows it hence why he's trying to beef it up to make a vast financial gain for himself - again! Stupid hs is not.
- Tm, London, 11/05/2009 17:24
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I view this opinion with caution as he is the one to benefit from of us following his lead.
- Guy, Luxembourg, 11/05/2009 16:41
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Greenshoots normally refers to gangrene in the body, well we have seen the like in the bodypolitics so thats a start.
- William, Forest Hill Surrey, 11/05/2009 16:30
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Soros....rich enough to influence the market with his dealings - and profit off our backs.
I wish him and his ilk a long and interesting life.
- Cap, london, 11/05/2009 16:04
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Well done Gordon Brown for guiding us all through the wordt of the world economic downturn
- Keith Price, Luton, England, 11/05/2009 15:58
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Absolutely, Alex:Mr Soros is a very brilliant man, but he doesn't make public pronouncements for our benefit. Nor do most other figures with a position in the market based on our predicted behaviour. The City listens because his opinion makes the weather, and they sell mackintoshes or T-shirts accordingly.
- Mdj E10, london uk, 11/05/2009 15:56
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...and all of the debt has gone away.
- Dave Davies, Basingstoke, 11/05/2009 14:46
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He's probably hedged his positions nicely so as to make a few sly million from the market reacting to his announcement. I can't see any signs of green shoots myself .....
- Marianne, SW France/London, 11/05/2009 14:41
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TAKE A WALK AROUND THE TOWN CENTRES UP AND DOWN THE COUNTRY THEY ARE IN A SORRY STATE I DONT THINK I HAVE SEEN ANY GREEN SHOOTS IF ANYTHING THEY ARE ALL GOING DOWNHILL FAST THE DEPRAVATION IS LOOKING OUT OF EVERYWHERE .
- James Fennessey, london, 11/05/2009 14:20
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Seems a little premature to be talking about a turn around, just as the major car manufacturers are going through a meltdown, which in turn will impact many others. Perhaps the finance sector is beginning to see a glimmer of light at the end of the tunnel, but other economic sectors are still at the mouth of the tunnel, so to speak. Although property prices have fallen, its difficult to feel they have bottomed out. The multiple of annual income necessary to purchase a home is still absurdly high.
- John W, Ottawa, Canada, 11/05/2009 14:08
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I agree, the guy takes positions and offers opinions based on those not because he is doing us a favour. I wonder why the City listens to him though
- Matt K, Ware, 11/05/2009 11:35
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I have been bemused at how the Gurus have either lost a packet (Buffett) or re-position views nearly every month (Soros) or mistakenly call the bottom and recommend Bank shares far too early late last year (Bolton).... and still no bankers put in jail for taking our economies to the brink of collapse!
- Mike, london, 11/05/2009 11:27
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Er... wasn't gorgeous George predicting the end of the world earlier this year? This illustrates the true nature of the problem we face: intense, unremitting volatility that defies prediction.
- Peter K, Taunton, UK, 11/05/2009 11:03
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I never believe a word this guy says as he's always got a 'position' he wants to talk up. About a month ago he was being incredibly negative.
- Alex C, London, 11/05/2009 10:27
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