Hedge fund legend George Soros thinks that Brexit is bringing calamity to the world’s financial markets.
“Unfortunately, Brexit has not only created an opening to reinvent the European Union, it has also aggravated two looming dangers,” said Soros in a speech to the European Parliament on Thursday that was obtained by ValueWalk.
“First, it unleashed a crisis in the financial markets, comparable in severity only to 2007/8. This has been unfolding in slow motion, but Brexit will accelerate it. It is likely to reinforce the deflationary trends that were already prevalent.”
Soros, who became famous for his massive bet against the British pound in 1992, noted before the UK’s vote to leave the EU a Brexit would cause serious problems. Now, he said those problems are coming to pass.
He said that all of consequences he feared leading up to the Brexit — a collapse in the pound, the possibility of Scotland leaving the UK, and economic worries — have already lead to “buyer’s remorse” for British voters.
Soros also said that the economic tribulations that have befallen the UK immediately following the vote could in fact lead to a more unified EU, rather than its end as some have warned.
“The referendum has highlighted for people in Britain just what they stand to lose by leaving the EU,” he said.
“If this sentiment spreads to the rest of Europe, what seemed like the inevitable disintegration of the EU could be instead creating positive momentum for a stronger and better Europe.”
Soros also advocated for more expansive fiscal stimulus on the part of the EU’s member governments, eschewing “the orthodoxy of German policymakers” that have called for austerity over spending. He advised the EU to lean on debt issuance in order to spend and get the wheels of the continent’s economy spinning again.
He also criticised the EU’s response to the refugee crisis, saying that it was an example of the economic and political failures of the organisation. After praising German Chancellor Angela Merkel’s willingness to open her country’s doors to refugees, Soros maintained that issuing debt to help deal with the crisis was necessary and the EU had to do more.
“To sum up, the refugee crisis poses an existential threat to Europe,” said Soros.
“As I said before, it is the height of irresponsibility to allow the EU to disintegrate without utilising all its resources. Throughout history, governments have issued bonds in response to national emergencies. When should the triple-A credit of the EU be put to use if not at a moment when the European Union is in mortal danger?”