In a recent op-ed published Monday, billionaire investor and philanthropist George Soros made his feelings regarding Brexit crystal clear. He believes the much discussed exit of the United Kingdom from the European Union will only create a death spiral of falling wages, growing debt, declining consumer spending, and a failing standard of living for British families.
In the opinion piece, released by The Guardian, he calls it a “lose-lose proposition” and mentions that the economic reality of Brexit is just now catching up with regular people in Britain. George Soros points to how the British pound fell in trading immediately following the vote, and how wage increases have not kept pace with the rate of inflation.
“Economic reality is beginning to catch up with the false hopes of the general population,” Soros wrote. “They believed the promises of the popular press that Brexit would not reduce their living standards, so they managed to maintain those standards by running up their household debts.”
“Once the experience of June is repeated in subsequent months, households will realize that their living standards are falling and they will have to adjust their spending habits,” he added. “To make matters worse, they will also realize that they have become over-indebted and they will have to pay back their debts. This will reduce the household consumption that has sustained the economy even further.”
Learn more on Discover the Networks about George Soros.
For many economic observers, his predictions hearken back to the financial collapse of 2008, from which many households and their incomes are still struggling to recover. The combination of inflation, increasing consumer debt, and falling wages is a classic “perfect storm” situation for an economic recession.
His major hope is that Prime Minister Theresa May will approach the Brexit negotiations with a more conciliatory spirit than she has shown in the past. The Tory loss of a parliamentary majority in the June 8 election could force her in that direction. In fact, David Davis, her Brexit negotiations secretary, has already had to back down in Brussels, agreeing to the timetable for negotiations set up by the EU ministers. Read more about George’s life story at biography.com
Soros, of course, has a great deal of experience with British currency. He built much of his fortune speculating in the pound, especially when it is in a position of free fall. In 1992 he made billions short selling the currency before a major crash happened. This time, however, he seems far more concerned with the people of the United Kingdom who will see struggle than he is with his own personal fortune.