Bill Gross, boss of the world’s biggest bond fund, was frequently quoted by Mr Osborne in early 2010 as saying that this country’s finances were “balanced on a bed of nitroglycerine”.
But this week Mr Gross captured headlines when he said the Government’s austerity measures now risk pushing the United Kingdom back into recession.
In an interview with The Times, he said a “mid-course correction” of Mr Osborne’s fiscal plans would lift the economy without damaging the country’s credibility over debt reduction in the eyes of bond investors.
“The economy in the UK is worse off than it was when the plan was developed, so there should be at a minimum fine-tuning and perhaps re-routing of the plan”, he said.
The same applied to other major eurozone economies and especially to the US itself, he said.
Last month, Mr Gross told the Financial Times he had called it wrong when he sold off United States government debt on the assumption it was overvalued and would be devalued by rising US inflation and a government economy chugging along at 2 per cent growth. It has since out to be a safe yielding investment in a struggling economy.
Instead, the US economy had not performed anywhere near as healthily as anticipated and even faces a major crisis. He has been advising his investors to look beyond Europe and the US which both face recession.
”The UK is actually in the best position of all to make a mid-course correction… a mild re-adjustment that might keep the economy out of recession would be viewed very favourably”, he said.
Statistics showed Britain’s services sector shrank during August by the biggest one month fall – from 54.4 to 51.1, with anything over 50 meaning growth – since 2001 during the foot and mouth crisis.
