Britain and US heading for a recession, warns financial guru Soros

Billionaire investor George Soros has issued a stark warning about the risk of Britain sliding into recession.

Mr Soros, the financier known as the man who broke the Bank of England, said world stock markets were in the midst of their worst crisis in 60 years.

Asked if Britain was heading for recession, he said: "I think it will be very difficult to avoid it."

Speaking to Radio 4's Today programme, he said financial authorities should have intervened in stock markets earlier than they did.

"The authorities came to rely on the markets to right themselves. They ought to have known better."

He added that the days of cheap money are over.

The interview echoes a warning yesterday when he said: "The situation is much more serious than any other financial crisis since the end of the Second World War."

His latest warning came as London shares shrugged off the global turmoil of the past two days to show healthy gains this morning. In early trading the Footsie rose 40.4 points to 5780.5.

But City traders forecast another day of volatility as investors reacted to fears that the world economy is in the midst of what could be a prolonged recession.

The City breathed a sigh of relief that the Footsie was able to add to yesterday's gains after Monday's £77 billion wipe-out, but trading was light, suggesting pessimism remains in vogue.

In Asia, most markets recovered after the savage losses earlier in the week.

London rallied yesterday after the US Federal Reserve slashed interest rates by 0.75 of a per cent to 3.5 per cent.

Last night Bank of England Governor Mervyn King ruled out such dramatic interventions, saying the financial system could not be salvaged merely cutting borrowing costs.