M&G's Woolnough: Why deflation is a good thing

M&G's Richard Woolnough has said the spectre of deflation emerging across Europe is a positive in the current environment, adding central banks should be comfortable with this development.

The manager of the country's largest retail fixed income portfolio, the £18.8bn M&G Optimal Income fund, said investors need not worry about deflation as a negative event. That is despite increasing warnings that the eurozone in particular, where inflation fell to a four-year low of 0.5% last month, is in danger of falling into a deflationary spiral. In the UK, too, inflation is now undershooting the Bank of England's 2% target for the first time in four years. But Woolnough said: "I do not think deflation is bad. I think it is good. For example, if someone came and did some work o...