The US is already in recession, according to billionaire financier Mr George Soros. At the World Economic Forum in Davos, Mr Soros said he believed the US was in recession "right now" but that any slowdown in Europe would be far less pronounced.

"The cyclical downward forces are less strong in Europe than in the US. Europe is engaging in structural reform and tax reductions and people are not as involved with the stock market."

But he also warned that Europe would be more affected by the US slowdown than the authorities were admitting. That was particularly true for the Republic, which had the most open economy, and for which the US was almost its biggest trading partner.

According to Mr Soros, the global financial system never recovered properly from the Asian crisis in 1997.

"The US Federal Reserve is determined to do whatever is necessary in cutting interest rates but they are more likely to overshoot than undershoot."

He added that many countries on the periphery could not cut interest rates as aggressively. "Capital will flee. Instead of relying on market discipline, we need to introduce some incentives to make it desirable for countries to follow policies that lead to growth. There is no mechanism for levelling the playing field."

He agreed that the anti-globalisation protesters did have a point. "There is something to protest about, even if I do not agree with their methods. The protest movement is plugging into something widely felt. The methods are not acceptable. I would like to see a genuine dialogue and constructive measures to improve the system. They are bent on destroying it."