Eurozone not viable, but UK outside the EU will be even less viable

Neil Woodford, a manager of investment fund W oodford Investment Management that manages over £9 bn on behalf of UK savers, has warned against a referendum on the country's exit from the European Union (EU), saying it would stem the flow of overseas investments into the country.

''The likelihood of a referendum I think will put a brake on external investment, international investment in the UK,'' Woodford said in an interview with the BBC.

Woodford, one of the most influential retail-backed investors, said the eurozone was not viable in its current form but an exit from the European Union would be suicidal for the British economy.

''I'm very conscious of the stresses and strains,'' he said, even as he predicted the bloc's decision to push Greece out of the currency union one day as economics takes precedence over politics.

Prime Minister David Cameron's Conservative Party has promised a referendum on whether the UK should continue in the European Union, which could take place next year should the Conservatives remain in power.

Woodford said the mere prospect of a referendum will prove very negative for the economy in the short term.

''It's a gut feel that investors will definitely have to impute a higher level of uncertainty with respect to the future of the economy, the currency. All those things will have an effect on investment,'' he said in a BBC World News interview due to air today evening.

Woodford, head of investment at Woodford Investment Management and formerly head of UK Equities at Invesco Perpetual, also said Britain's current position in the EU was untenable.

''Ultimately, this country will have to make a choice about whether it is a fully signed-up member of a eurozone project or not and, I think, sort of being half in as we are at the moment was never really a long-term viable position to be in.

''I am very conscious of the stresses and strains that will continue to increase, I think, in the eurozone,'' he said. ''The debt problems, the economic disparity - in a very simple sense pretending that Greece was Germany is a fundamental error.

''Pretending that Portugal was Germany… having the same interest rate, the same monetary policy for two economies that are so different seems to be a fundamentally flawed assumption,'' said Woodford.

Woodford, who is considered in the industry as one of the country's best-performing fund managers, gained fame during his 25-year career at Invesco Perpetual, for taking a long-term view on investments.

He left Invesco last year to launch his own investment fund.