Woodford Investment Management  

Woodford rails against 'London elite's drivel' about Brexit

Woodford rails against 'London elite's drivel' about Brexit

Neil Woodford has attacked the attitudes of what he calls the “London elite” for their claims about Brexit and the UK economy.

Speaking at an event for financial advisers last week, at which he was asked about his views on Brexit and the outlook for the UK economy, Mr Woodford said concerns about wage growth were “drivel”, and that the “vested interests” who predicted the UK economy would nosedive in the immediate aftermath of a vote to leave the European Union have been proven wrong.

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That analysis was based on a report he commissioned from Capital Economics. 

That was the second piece of research he has commissioned on the subject of Brexit.

He said: “Before the referendum vote, the vested interests, most of them in London, were warning us about voting to leave. The chancellor at the time said there would be a punishment budget.

"The Bank of England said rates would have to rise. They said there would be higher unemployment, almost every economist was saying that there wouldn’t be economic growth, that business investment would fall.”

He said he was “cynical” about the consensus view and so chose to have a report written, which came to largely the opposite conclusion.

Mr Woodford said:  “And now look at it, interest rates fell straight after Brexit, not rose, unemployment fell not rose, the economy grew, business investment is up not down, all of the things they said would happen have not happened."

If Mr Woodford’s analysis of the economy post-Brexit has been vindicated, it has not yet led to improved sentiment towards stocks in the UK domestic economy of the sort in which he is invested, and that means his fund has under-performed and shrunk in size from more than £10bn to less around £8.4bn at the time of writing.  

Performance has been somewhat better of late, with the fund now in positive territory for the year to date, though it is still among the very worst performers in the sector.

His comments come a week after the Bank of England increased the base rate to 0.5 per cent as inflation hit 3 per cent.

Mr Woodford said: “The London elites haven’t forgiven the people for voting leave. They say they aren’t right but they will be, and that is blocking everything up. Once we get greater clarity on what Brexit looks like, then that will unblock a lot of things.”

Mr Woodford said he thinks a deal will be reached with the EU , particularly as attitudes in Germany have changed in light of their recent election result.

A feature of the UK economy since the Brexit vote has been the strength of consumer spending despite sluggish real wage growth, and higher inflation.