What Jeremy Corbyn means for investors
Jeremy Corbyn is unlikely to become Prime Minister. Polling by ORB found that one in five Labour voters at the last General Election would switch to the Conservatives because of Corbyn. His net approval ratings are also dire: at minus 18 per cent, according to YouGov. At the same point after he was elected Labour leader, Ed Miliband’s net approval rating was plus 20 per cent.
NEVERTHELESS, CORBYN COULD STILL HAVE AN IMPACT ON INVESTORS
RENATIONALISATION
Corbyn and his shadow chancellor John McDonnell have argued that the railways should be publicly run, and that the state should take some stake in the energy firms. Nationalisation could even extend to the banks under a Corbyn-led Labour government. If the market fears there is a risk that publiclytraded companies could be forcibly taken over by the state, their prices would reflect that risk – and the only direction would be down. And if the chances of a Labour victory increase, The Share Centre analysis suggests, the discount could increase dramatically.
UNION ACTIVITY
Labour under Jeremy Corbyn has revived its close links with the trade unions, attacking government plans to reform them. The Share Centre suggests that a re-energised trade union movement could become more militant, posing difficulties for firms with highly unionised workforces. This could have a direct impact on the performance of businesses like Royal Mail and G4S, but may also cause problems for firms that supply the public sector, if the latter is disrupted by strike action.
POPULISM
The threat may not be from one side. Even before Corbyn was elected, the Conservatives had already stolen Labour’s clothes by announcing a much higher minimum wage – the National Living Wage – which companies in sectors like retail, care homes, and entertainment have said will hit profitability hard. If Labour under Corbyn pushes politics in a more populist direction, the Tories may respond in kind with other policies that are unfriendly to businesses and investors.