Woodford: Economic Brexit arguments are ‘bogus’

With a referendum on the UK’s membership of the EU drawing near, Woodford Investment Management has commissioned a report into the likely impact of the decision - and Mr Woodford said he broadly agreed with a conclusion that the outcome would have relatively little impact either way.

The manager acknowledged that the vote, which now looks likely to take place this June, could produce uncertainty and a weaker pound in the run-up to the decision, but said the long-term effects would be minimal.

“I’ve heard both views...either that staying is incredibly beneficial or leaving would be very damaging, and I’ve heard the opposite argument from an economic point of view,” he said.

“I think it’s pretty clear that that’s a bogus argument. I think it’s really hard to see any significant credibility in an argument to stay or to leave constructed around economics.

“I think it’s a nil sum game, frankly. If we stay or we leave, the fundamentals of the economy will be relatvely unmoved.”

Mr Woodford also asserted his investments would not be unduly affected by the vote. He did, however, note that a Brexit would be “politically, a significant event” in both the UK and further afield.

The manager’s comments accompanied the publication of a Capital Economics report into the economic impact of a Brexit. The forecaster is headed by noted eurosceptic Roger Bootle, but the fund firm said the report represented an independent look at possible outcomes.

The study questioned the economic importance of a British departure from the EU, noting: “Although the impact of Brexit on the British economy is uncertain, we doubt that Britain’s long-term economic outlook hinges on it.”

Areas which have been suggested as potential victims of a Brexit, such as financial services, the London property market, and foreign direct investment more generally, would only see “short-term” costs which may be offset by long-term opportunities, the report said.

While a modest negative impact on growth and job creation is possible, the opposite is “slightly more plausible”, Capital Economics added.

The authors said: “We continue to think that the United Kingdom’s economic prospects are good whether inside or outside the European Union.

“Britain has pulled ahead of the European Union in recent years, and we expect that gap to widen over the next few years regardless of whether Brexit occurs.”

Mr Woodford, meanwhile, has previously warned that the likelihood of a referendum on British EU membership could “put a brake on external investment and international investment in the UK”.

He said last March: “It will create uncertainty in the same way a Scottish referendum created uncertainty.”