Soros puts Tory economic policy in the dock again

George Soros, the investor whose bets against the pound in 1992 destroyed the Conservatives' reputation for economic competence, is again asking awkward questions of the party's policies.

At the World Economic Forum in Davos, Soros was asked about the coalition government's spending cuts and emergency budget. He told the Daily Telegraph: "I do not think they can be implemented without pushing the economy into a recession. My expectation is that it will prove to be unsustainable."

Following the shock announcement earlier this week that the British economy contracted by 0.5 per cent in the last quarter, prime minister David Cameron refused to row back on the austerity measures he has put in place to reduce the UK's deficit.

At prime minister's questions yesterday he said: "The worst thing to do would be to ditch your plans on the basis of one quarter's figures".

In Davos, Soros accepted that Chancellor George Osborne's austerity measures had been well received by bond markets to start with. "They may have been right in embarking on it," he said. "The initial reaction has been very positive."

But he did not rule out the possibility that Cameron's Conservative Party will be forced into a humiliating climbdown at some point in the not-too-distant future, saying to the BBC: "I think they will probably have to modify it when the effects are felt".

Soros is known as "the man who broke the Bank of England" because he made a reported $1bn by correctly predicting in 1992 that the British government would have to devalue the pound. 'Black Wednesday' destroyed the Conservatives' economic credibility for years.

Cameron and Osborne will be praying that lightning cannot possibly strike twice. ·