Hedge fund Toscafund bets UK growth will outpace U.S.
* Predicts UK GDP growth to beat U.S. in 2014-2020 inclusive
* Expects UK interest rates to reach 1.5-1.75 pct in 3 years
* Owns positions in UK housebuilding, capital goods, property, building materials stocks
LONDON, Aug 21 (Reuters) - The resurgent UK economy is set for faster growth than the United States for much of the rest of the decade, according to Toscafund, one of Europe's biggest equity hedge fund managers.
The London-based firm has been betting on a revival in the UK economy since last year when many commentators were predicting a triple-dip recession.
The fund sees population growth, via immigration, as a key driver of the economy along with a "flourishing" carmaking industry and the increasing attractiveness of UK universities to students from emerging markets.
"(I) firmly believe UK GDP will only surprise upwards from here," Chief Economist Savvas Savouri told Reuters this week, estimating that British economic growth would outpace the United States' expansion every year from 2014 to 2020 inclusive.
"I can't think of another country on this planet that is the nexus of emerging world growth more than the UK. By 2045 the UK's population will be bigger than Germany's."
Savouri said Toscafund owns positions in housebuilders, capital goods stocks (firms that manufacture goods used to make other products) and property stocks such as British Land , Land Securities and Great Portland Estates , as well as building materials firms such as Travis Perkins and Marshalls.
"We're hugely enthusiastic about the UK economy and stocks that have UK beta," he said, referring to stocks sensitive to the UK's economic growth.
The Office for National Statistics forecasts the UK population will rise to 73.2 million by mid-2035 and 77.1 million in 2046, although it says the latter longer-term forecast should be treated with caution.
Germany's population is currently 80.2 million.
Savouri said Toscafund's founder Martin Hughes first signalled his confidence in the UK economy by backing a bid to take housebuilder Redrow private last September. The proposal, tabled by former Redrow founder Steve Morgan, was unsuccessful but triggered a rerating for UK housebuilders.
After narrowly avoiding a triple-dip recession Britain's economy is now gathering strength and looks set to build on its 0.6 percent growth in the second quarter, with employers saying they are hiring at the fastest pace since 2007.
Economists polled by Reuters expect UK GDP to growth 1.8 percent next year and the U.S. to grow 2.9 percent.
Savouri added he only expects UK interest rates to have reached 1.5-1.75 percent in three years' time, and 3-3.5 percent in five years' time. UK 10-year yields have risen to around a two-year high this month as markets bring forward their expectations for a rise in interest rates.
A surge in inflation and interest rates, further weakness in sterling and a new global growth crisis are all seen as unlikely threats to his bullish UK economic assumptions, Savouri said.
Toscafund is short building material stocks in Europe such as Lafarge and Saint Gobain. Shorting means betting on a lower price.
"I'm incredibly concerned about mainland Europe, where the consensus is positive," he said. "I think it (euro zone) will stumble back into recession. Labour markets are still very, very weak. We'll get an increasing number of evacuees into the UK."