Woodford: EU project ‘flawed’

THE eurozone is ‘fundamentally flawed’ and is not viable in its current form, according to one of Britain’s leading fund managers.

Neil Woodford said he was ‘very conscious of the stresses and strains’ in the single currency bloc such as mounting debts and ‘economic disparity’ between countries such as Germany and Greece.

He also said uncertainty over Britain’s membership of the is damaging to the British economy – adding that the UK must decide to either adopt the euro or leave.

Woodford, who is head of i nvestment at Woodford Investment Management, said ‘pretending that Greece was Germany is a fundamental error’.

‘Having the same interest rate, the same monetary policy for two economies that are so different seems to me to be a fundamentally flawed assumption right at the start of the project,’ he said. ‘The policy makers are very committed to keeping the show on the road. Too many people have underestimated the commitment of policy leaders in Europe to try and ensure the project is successful, but ultimately I think economics has a habit of overruling politics.’

Woodford said a British exit from the EU could be ‘very negative in the short term’ and warned that the referendum promised by David Cameron if he is still in power ‘will put a brake on investment in the UK’.

‘I think a referendum on our membership would create a lot of political and economic uncertainty in the UK,’ he said.

But he added: ‘ Ultimately this country will have to make a choice about whether it is a fully signed up member of a eurozone project or not.

‘I think we have to either make a decision to get out or get fully in.’