Soros Warns Germany Faces Self-Made RecessionWorld | April 11, 2013, Thursday // 14:26| views
George Soros expects the German economy to be in recession when a new parliament is elected in September. Photo by Getty Images
Germany is heading for a recession of its own making, Hungarian-born billionaire George Soros has warned.
In a speech in Frankfurt this week, the born investor said he expected Europe's largest economy to be contracting by the time Germans vote in national elections in September.
"Germany itself remains relatively unaffected by the deepening depression that is enveloping the eurozone," he said in a speech in Frankfurt, pointing to the Cyprus bailout.
"I expect, however, that by the time of the elections, Germany will also be in recession."
Eurozone gross domestic product shrank by 0.6% in 2012 and is forecast to contract by a further 0.5% this year, according to the European Central Bank.
Soros said Germany's insistence that eurozone states follow a policy of austerity, coupled with ECB monetary policy that is "out of sync" with the quantitative easing being pursued by other major central banks, would dampen activity.
"The financial problem is that Germany is imposing the wrong policies on the eurozone," he said, pointing the finger at austerity measures that have left the countries of southern Europe stuck in recession and with record levels of unemployment.
"When everyone is doing the same thing it simply doesn't work: it is clearly impossible for all members of the eurozone to improve their balance of trade with one another," he said.
Soros said Germany faced a stark choice if it wanted to lead Europe out of a crisis largely of its own making: accelerate the process of eurozone integration with the aim of pooling debt and issuing Eurobonds; or leave the euro so that others can issue common debt.
"My first preference is for Eurobonds; my second for Germany leaving the euro. Either choice is infinitely better that not making a choice and perpetuating the crisis," Soros said.