Soros lashes Bush with warning of post-election blues for US economy

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The Independent Online

The economy of the United States will "pay a penalty" next year when the White House's politically motivated growth boost runs out of steam, George Soros warned yesterday.

In a vitriolic attack on George Bush, Mr Soros said economic policy in the US was wholly devoted to securing a second term for the President.

The blunt warning from the world's most famous financier came as official figures showed the US economy grew more slowly than expected over the final months of last year, knocking US financial markets.

Speaking in London to promote a book attacking US foreign policy, Mr Soros said he believed the US economy would continue to show strong growth this year.

"Right now we have a very favourable conjuncture because the US economy is in the hands of Karl Rove, the strategist arranging for the campaign of Bush," he said. "Everything that could be done to pump up the economy has been done - successfully so far."

Mr Soros said the world's largest economy had also benefited from a rebound in the world economy and the fall in the dollar, which had boosted US exports. "But there will be a penalty to pay after the election, so it looks good this year but less good from 2005."

Mr Soros - best known for betting against the pound during the 1992 ERM crisis and "breaking" the Bank of England - refused to be drawn on the direction of the financial markets.

According to Wall Street speculation, Mr Soros and a number of other wealthy business people have taken a massive "short position" on the dollar - betting that the US currency will fall. So far, it has fallen 18 per cent from its peak.

Mr Soros said toppling President Bush was the "central project of my life", and he added: "I'm willing to put my money where my mouth is."

He has donated $12.5m (£6.9m) over the past year to fund political activities that oppose Mr Bush's re-election.

"I think Bush is changing the character of the US and leading it in the wrong direction," he said. "A bunch of ideologues has captured the executive and taken America too far to the right."

Official figures showed the US economy grew 4.0 per cent in the fourth quarter of last year. This was below forecasts of a 5 per cent rise, and well below the third quarter's blistering 8.2 per cent rise.

The figures revived concerns over the strength of the US recovery. In early trading, the Dow Jones share index was down 66 points, or 0.6 per cent.

Economists said the growth might not be enough to lead to the job creation that has so far been absent from the recovery.

Patrick Franke, at Commerzbank, said: "Demand growth of 4 per cent won't be sufficient to generate employment growth strong enough to lower the unemployment rate. This in turn would leave the expansion vulnerable."

The Commerce Department said consumer spending rose 2.6 per cent, a sharp slowdown from the tax cut-induced 6.9 per cent gain in the previous quarter. Growth in business spending and residential investment also slowed.