Hedge fund guru George Soros says that a recession in Europe is “almost inevitable”, and that the push to curb government spending while major economic problems remain there could lead to a downward spiral.

Soros, who last week said that the world had just entered “Act II” of the global financial crisis, told a seminar this week that Germany has imposed its own standards on the rest of Europe, which could lead to trouble, Reuters reports. “That’s the real danger of the present situation — that by imposing fiscal discipline at a time of insufficient demand and a weak banking system, by wanting to have a balanced budget you are actually … setting in motion a downward spiral,” Soros said.

“Germany is going to smell like roses but (the rest of) Europe is going to be pushed into a downward spiral, stagnation lasting many years and possibly worse than that,” Soros said. “In other words, I think a recession [in Europe as a whole] next year is almost inevitable given the current policies.”

In a speech given last week at the Institute of International Finance in Vienna, Soros said a push to rein in debt could lead to problems for the global economy. (The New York Times offers a full transcript of that speech here.) “Doubts about sovereign credit are forcing reductions in budget deficits at a time when the banks and the economy may not be strong enough to permit the pursuit of fiscal rectitude,” he said.

“We find ourselves in a situation eerily reminiscent of the 1930s,” Soros added. “Keynes has taught us that budget deficits are essential for counter cyclical policies, yet many governments have to reduce them under pressure from financial markets. This is liable to push the global economy into a double dip.”