Britain has yet to feel the worst effects of the credit crunch, the billionaire investor George Soros has warned.

In a bleak assessment, Mr Soros said that while the "acute phase" of the credit crunch has passed, the real economy was only just beginning to suffer.

He said: "We’ve had a pretty serious crunch but the acute phase is behind us and now we’ve yet to feel the effects."

Speaking on BBC Radio 4's Today programme, Mr Soros said the world was set for a period of “greater instability”, and no-one could predict how bad it would get.

“There is a much greater degree of uncertainty in financial affairs than we recognise. The degree of uncertainty is also uncertain.

“Over the last 60 years we have had a pretty stable situation and I think we are entering a period of much greater instability, because we have got the threat of recession and at the same time the threat of inflation,” he said.

On the housing crisis, Mr Soros warned the fallout in the UK would take longer to correct than that in America.

“In the UK we’ve had a housing bubble that in terms of price increases has been greater than in the United States.

“That’s also now going to be corrected - it is taking longer than in the States because you haven’t had over-building like in America."

Predicting a fall in UK house prices, he added that property prices relative to people’s income were higher in Britain than “anywhere else in the world."

This is not the first gloomy diagnosis this year from Mr Soros, most famous as "the man who broke the Bank of England" on Black Wednesday in 1992, when he made $1 billion betting against the pound. In January, at the World Economic Forum in Davos, he warned that the world faced its worst financial crisis since the Second World War.

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