What a Corbyn-led government could mean for investors
Whether you’re chanting it from a tent in Glastonbury or howling it at Radio 4 in despair, the name Jeremy Corbyn tends to incite some rather impassioned reactions.
Edward Smith, Head of Asset Allocation Research
Our job is to try to work out what a Corbyn-led government might mean for the UK economy and its financial markets. That’s not an easy one in this case given the difficulty of reconciling the 2017 Labour manifesto with the radicalism claimed by many of Jeremy Corbyn’s acolytes. I’ve tried very hard to suppress any political bias, and I hope you can too. Any analysis that doesn’t isn’t worth the paper it’s written on.
Let’s get one thing out of the way: we’re not in the business of forecasting elections, especially when even the timing of the next one is hotly debated. The polls suggest that the Conservatives would be out of No. 10 if they called an election today. So for the purpose of this note, we assume that Corbyn becomes Prime Minister tomorrow.
Some believe that Corbyn’s bold new policies will usher in a more equal society, while others worry that his agenda will bankrupt the nation and drive businesses from these shores in droves. After extensive analysis, we feel both are likely to be wrong. But there are a few risks. Not least, a Corbyn-led government would polarise people, and people (unfortunately) influence investments.
We start by looking at what the markets have done since Labour started soaring up the polls in May. We then look for any pertinent historic precedents of a Western leader with a Corbyn-like agenda. Next we go through 2017’s Labour manifesto in some detail and ask what that might do to the economy if we were to take it at face value. But given that it’s not nearly as radical as many of Jeremy Corbyn’s supporters believe it to be, we then ask if we can take it at face value at all.