Mr Odey said now is a great time to bet on shares slumping in value

Hedge fund manager Crispin Odey (pictured) has warned that major economies are entering into a recession that will be remembered for generations to come

A hedge fund manager who made millions after correctly predicting the credit crunch has warned major economies are entering a recession that will be ‘remembered in a hundred years’.

In a letter to his well-heeled customers, Crispin Odey predicted that ‘equity markets will get devastated’ and described it as the best time to bet on shares slumping in value since the recent financial crisis.

Citing the current turmoil in the markets, including a dramatic slump in the oil price and a ‘faltering Chinese economy’, he said: ‘This downcycle is likely to be remembered in a hundred years, when we hope it won’t be rated for ‘How good it looks for its age!’.

Oxford-educated Mr Odey is the founder of Odey Asset Management, which runs more than £7.6billion for investors around the world.

As one of the most successful hedge fund managers in the UK, he has made a fortune from betting on shares in companies plunging in value.

This is known in the industry as ‘shorting’, a process which involves borrowing shares and selling them in the hope that the price will fall and they can be bought back at a profit.

Mr Odey, 55, was one of the earliest to forecast that the borrowing binge that fuelled the economy would trigger a financial crisis.

But he came in for criticism when he was outed as one of the fund managers shorting the struggling Bradford & Bingley during the summer.

The tactic was hugely profitable for Mr Odey, who paid himself £28million after his company enjoyed a bumper year in 2008.

Despite the strong economic recovery in the UK, Mr Odey has grown increasingly gloomy over the last six months.

In his newsletter to clients he warned of problems further afield, with the slowing Chinese economy dragging down growth in Australia, South Africa and Brazil.

He said the fall in commodities such as oil, which has plunged from $115 a barrel in June last year to under $50, is ‘bringing with it pain to those heavily exposed’ – such as the Middle East, Venezuela, Argentina, mid-west USA, Canada, Norway and Scotland.

Closer to home, he warned the European Central Bank’s drastic efforts to revive the eurozone by printing £45billion a month through quantitative easing, would fail to prevent a damaging downturn.

He compared the combination of QE and negative interest rates to ‘pushing on a string’, and warned huge levels of debt to build up.

CITY LEGEND WHOSE GAMBLE PAID OFF Some of Crispin Odey’s critics might claim that he acquired his wealth through the misfortune of others. But in the rarefied world of the Square Mile, he is something of a legend. Born to a prominent Yorkshire family and educated at Harrow and Oxford, he turned his back on a promising law career to become one of Britain’s most powerful hedge fund managers. As early as 2005, he was gambling on shares in high street lender Bradford & Bingley going down in value – a bet which paid off when the firm was nationalised in 2008. And his private life is equally high-flying. He was briefly married to Rupert Murdoch’s daughter Prudence, before marrying Nichola Pease, a scion of the Barclays banking family. Advertisement

‘My point is that we used all our monetary firepower to avoid the first downturn in 2007, so we really are at a dangerous point.’ he said ‘If economic activity far from picks up, but falters, then there will be a painful round of debt default.’

Last night one investment expert says it was difficult to ignore Mr Odey’s grim predictions.