Advice to Europe - from Britain's richest man

Even Lakshmi Mittal is feeling the economic pain. The metals magnate tells James Ashton what he would do about it

How do you puncture high spirits on a sunny afternoon in one of Kensington's most sought-after addresses? Simple, just bring up the state of the economy. Lakshmi Mittal, the steel magnate and Britain's richest man, has been elated by the impact of the Olympics on London. Waiters are friendlier and even if shops and West End nightspots are ghostly quiet, he believes the Games are showing the capital in a good light.

Those that want a new view of the city can ascend the ArcelorMittal Orbit, the opinion-dividing steel tower in the Olympic Park that has garnered more column inches from the world's press than many of athletes competing below.

For Mittal, who funded the structure after a chance encounter with London mayor Boris Johnson in the cloakroom at Davos during the World Economic Forum, it offers a cheerful distraction from the economic mire. Away from the Games, it is a case of same old, same old.

"Business is challenging," Mittal said with a sigh, as he sat in the conservatory. "The macroeconomic indicators are not good, not positive, Europe is clearly challenging. My team believes that we will have this challenge continuing for at least 12 to 18 months and it could get worse if the Europeans don't get their act together."

Oh dear. The gloom permeated ArcelorMittal's last set of trading figures, which showed net income was down 63 per cent to $970m (£620m) in the first half of the financial year. Costs are being trimmed at steel plants. If only politicians could come together to tackle the crux of the issue. "They are busy on austerity measures and fixing the banks' problems but the real issue is we are not seeing any money coming into the real economy and that is causing concern," he added. "We can clearly see in our business that segments like construction and real estate are not making any progress, so we are concerned about the global economy."

Mittal, 62, whose fortune stands at £12.7bn, thinks Europe can learn a lot from across the Atlantic, where confidence is recovering. "Look at the United States: after the 2008 crisis the Federal Reserve and US government made a lot of efforts and now we see the US economy is coming out (from its slump)…If we do nothing, we are doomed. We have to do something. The question is whether austerity is enough or we need something along the lines of austerity and growth to keep the economy going forward. (I think) we need a bit of both."

Mittal can survey the global economy from a unique position. ArcelorMittal, the steel empire he began building as the international arm of his father's steel business, stretches from Kazakhstan to Mexico and employs 260,000 staff.

Named after the Hindu goddess of wealth, he joined his father's firm at the age of 19. By his mid-20s he'd set up a steel plant in Indonesia that his father had been unsure of. He developed a taste for globe-trotting, spying an opportunity to consolidate a localised, fragmented industry and rip out costs. A buying spree followed and, by 1995, the family business split.

Such vision has brought him wealth that includes a Gulfstream jet and a home bought for £57m eight years ago from Formula One boss Bernie Ecclestone, making it the world's most expensive house at the time.

Myths abound about this place. For example, where are the stones taken from the same quarry as the Taj Mahal that has earned it the nickname of the Taj Mittal? "There are stones in the swimming pool area," he says with a wave. "I did not buy those. We bought the house with the stones already there." What is true is the walls are stacked with art and double doors lead out into the garden where water bubbles in an impressive fountain and a kids' playground stands, to occupy his grandchildren.

Tough times for ArcelorMittal mean further steel expansion has been put on hold in favour of cost-cutting.

Mittal's most high-profile investment in Britain has been the Orbit. What began as a pledge to donate 2,000 tonnes of steel became an all-encompassing project that involved Mittal helping to single out Anish Kapoor's design. Before long, the budget was rising, as was the size of the structure.

"It started as a very small project," said Mittal, "30 metres, 40 metres in height. Not a big investment, not a big thing. But I also got carried away by the whole excitement. while Cecil (Balmond, the engineer) was doing it he felt the height could go up to 115 metres. That required some extra investment, but we did agree."

In the end, £10m became £23m. Its legacy is safe when the park reopens as a tourist attraction after the Olympics. The Orbit earned Mittal a turn in the torch relay and a visit from the Queen the day after the Games opened.

"When she walked in she said: 'It is yours.' And I said 'Your Majesty, it is ours.' I've got some amazing photos."

They sound like an ideal memento of the few days when one of the world's biggest businessmen could set aside the woes of the global economy.