The ongoing financial turmoil and economic gloom will take 10 or 20 years to heal, Hugh Hendry, partner at hedge fund Eclectica, told CNBC.
"It's not a question of losing out in a recession, I'm talking about 10 or 20 years before we recover from this. This is a catastrophe," Hendry told "Power Lunch Europe."
Bank of England Governor Mervyn King confirmed the country is probably heading toward recession for the first time Tuesday, but Hendry says the outlook spells depression.
UK interest rates will be slashed to 2 percent by the end of the year, Hendry said. But that won't be enough to avert disaster, he added.
(Watch the full CNBC interview with Hendry above).
Interest rates should have been reduced before the turmoil took hold and the economy has been allowed to stall, Hendry said.
The European Central Bank is also at fault, according to Hendry.
"History will send the ECB to damnation because they have sent us to damnation," he said.
Hendry is increasing the risk exposure in his hedge-fund's portfolio, having avoided risk in recent years. The hedge fund industry has suffered serve losses in recent months.
"The reality is that most hedge funds bought into the myth, bought into the dream, like everybody else and they're getting destroyed," Hendry said.
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