Complacency about Jeremy Corbyn is dangerous: He could push UK politics in a populist direction

It wasn't that long ago, but it is easy to forget the market uncertainty that preceded the General Election in May, and the relief rally in UK shares that followed it. 

 

We saw particularly strong performance in equities sensitive to the outlook for domestic consumption after the election of a modest Conservative majority, deemed to underwrite Britain’s economic recovery, and the defeat of a Labour Party in apparent disarray given the SNP’s usurpation of its Scottish vote. 

 

Indeed, it was only really after the result came in that it became clear just how concerned the market had become about a party whose more left-of-centre policies seemed to be garnering the most traction in the polls.

 

The election of Jeremy Corbyn as Labour Party leader, sparking deeper divisions within an already fractious party, may be considered by some as an amusing post-script to an engaging tale. 

 

 

After all, a genuine challenge to the direction of economic travel comes in the form of a change in government. 

 

With Labour further enfeebled by the election of Corbyn, the chances of such a change has grown more remote.

 

But this is a dangerously narrow view: the Labour leadership election outcome should not be ignored.

 

In fact, because the probability of a swift recovery in Labour’s share of the vote is so low, the potentially more significant impact will be to push the UK’s political agenda in a far more populist direction.

 

Unencumbered by the compromises required for policies to ever be put into practice, a party can move beyond the politics of the head and play more on the emotions of the electorate. In short, that party can connect in a way that those looking to form a government cannot.

 

 

This becomes important when it affects the wider political discourse and the policies other parties adopt. Indeed, we have seen the implications play out in the months following the General Election, even before Corbyn’s election as leader. 

 

The introduction of the National Living Wage by the chancellor in July was clearly an attempt to wrest the initiative on low pay from Labour. 

 

However, it has also been met with a mixed response from business and it will negatively impact industries like food retail, which are already facing intense competition and deflation.

 

It was a surprising initiative in every sense, given that the Conservatives had just won a majority. It reflected the latent “power” of a party – Labour – routinely described as “heavily defeated”. 

 

There is every chance that further populist manoeuvring by Labour will push the Tories to adopt other similarly-received policies. 

 

This is not the only dimension to this issue. Minority voices are also growing in the Conservative Party, as can be seen in the challenges faced by David Cameron over the set-up of the EU referendum, despite his victory in the General Election. 

 

So the election of Corbyn should not be ignored. It is another example of the profound change in the political structure of most developed economies. Power isn’t what it used to be.