Hedge fund backs Britain's recovery Britain is positioned for a powerful recovery in the coming years and by 2050 will overtake Germany to become Europe's biggest economy, according to one of the UK's leading hedge funds. The eurozone crisis could be a significant boon for Britain, according to the London-based Toscafund , and the country will enjoy a boom on the back of more jobs created in finance in the City of London, the strength of its education sector and strong links to emerging market economies that will fuel exports. Toscafund reached its conclusion after analysing a range of data - such as UN immigration projections, manufacturing output figures and government spending projections - for a 92-page economic analysis by its chief economist, Savvas Savouri. "Opinion is so dour about the UK," Mr Savouri told the Financial Times. We wanted to expose how misinformed the received wisdom about the economy is. Mr Savouri says an "austerity obscured consensus" masks benefits the UK will accrue in the coming years thanks to huge demographic changes, including many skilled workers fleeing difficulties in Europe. London and the UK are already benefiting from a large-scale "evacuation" of capital and skills from the EU, he said. "Favourable population growth will be key," the research states. Toscafund believes the UK population will swell to more than 85m by 2030 - in excess of the UN's current projections. London will cement its reputation as the world's "capital of capital" according to Toscafund, and will benefit from factors such as a resurgence in the importance of the pound as an international currency. The fund expects Britain's education system to meanwhile become a key "export" as growing numbers of foreign students seek fee-paying places at UK universities, rising to half a million within 10 years. Manufacturing will continue to decline, however, the research suggests, becoming an even smaller component of the UK economy relative to services than it is today. "This [research] is not a paean for the UK," said Mr Savouri. It was a serious research exercise to try and expose how much of the perception of our dismal economic situation is myth. Mr Savouri attributes the UK's current sluggish performance to "extremely weak" consumer spending, but says he believes this is a "handbrake that will come off quite quickly" once sentiment shifts. "I can't emphasise enough how the labour market and housing market in the UK are remarkably robust," he said. All in all, the medium-term outlook for the UK is better than Germany's, he believes. Britain's population could overtake that of Germany as soon as 2040, and GDP will too, the research says. In the shorter term, meanwhile, Germany is far more exposed to the pitfalls of a slowdown or break-up across Europe than Britain. Europe accounts for 80 per cent of Germany's exports. However, the picture for the UK is not entirely rosy. The research notes that benefits to the British economy will be "disproportionately" felt in London and the south-east, while regions such as Wales, in comparison, have local economies with "relatively poor alignment to the growth forces we believe will drive Britain's wider economy." The challenge of further large scale immigration - which Mr Savouri believes will occur whether the government wants it to or not - will also become a significant social issue to tackle.