There is a "serious risk" the global economy could slip back into recession if worldwide government stimulus measures are taken away, George Soros, chairman of Soros Fund Management, told CNBC Wednesday.
"The global economy has been stabilized; the artificial life support has worked. But we are not out of the woods because if we withdraw the stimulus too soon there's a serious threat of a double dip," Soros said at the World Economic Forum in Davos.
At the Forum in 2008, the central banks of the US, Europe and Britain all slashed interest rates in a coordinated move to support the economy. This was quickly followed by other stimulus measures such as quantitative easing, but investors and economists are anxiously watching for signs the policies will quickly tighten.
The tightening of central bank policy runs the risk of stalling the tentative economic recovery, according to Soros.
The number of U.S. households in foreclosures has to be reduced in order to improve the economic outlook, Soros said.
He suggested giving defaulting homeowners the right to rent their property instead of being evicted. The move would allow Fannie Mae and Freddie Mac to bid for the houses, according to Soros, which would backstop house prices in the US and stop auctions depressing the market.
Meanwhile in Europe, Soros said that Greece would manage to avoid defaulting on its debt and put its economic woes behind it.
"I'm pretty confident that Greece will do whatever is necessary to meet the conditions that the (European Central Bank) sets," Soros said.
"I think that they might lean on Germany, but Germany is not in the mood to be the deep pocket … I think it will be the European Central Bank and the conditions that they set. " he added.
Soros pointed out that when Hungary went through a similar crisis of confidence it managed to turn itself around within six months. Greece will also be able to improve its prospects, he said.
