View more on these topics

MM panel: Corbyn shock could be less than hard Brexit

Jeremy CorbynThe shocks of a potential Corbyn-led government would be less than a hard Brexit might cause to the UK, experts have argued.

The general election of 2017 saw prime minister Theresa May’s Conservative party losing its majority at the Commons, while the opposition, led by Labour’s leader Jeremy Corbyn, defied predictions gaining seats in the house and a 40 per cent share of the vote.

With the next UK general election due in 2022, when the UK will have been outside the EU for three years already, commentators have argued a potential Corbyn government won’t create much noise, as opposed to what a hard Brexit would do.

Speaking on a Money Marketing panel today, Aspect 8 chartered financial planner Claire Walsh said Brexit will bring far greater uncertainties than a Corbyn government to markets and doesn’t see his leadership and suggested nationalisation measures as a “big risk” for the country.

On the Corbyn effect on investing, the panel had mixed views, however.

Efficient Portfolio managing director Charlie Reading said a Labour government could be negative for equity investors in the long term, while Walsh said some sectors could benefit from it, like infrastructure, utilities, and housebuilders.

Walsh said: “None of the market shocks came from little political changes [in recent times]. We shouldn’t speculate on that.”

On the other hand, Royal London director of policy Steve Webb, also speaking on the panel, expects interest rates to raise if Labour succeeds at the next election.

He said: “Rates will go up if the government starts borrowing. And that is a mixed blessing…defined benefit deficits might come down too.”

Reading said Corbyn might cause worries about sterling, which in return could create a potential problem for overseas investment, but Lothbury Pendil Financial Services chartered financial planner Nathan Harris said a weaker sterling could instead attract money from overseas.

On the overall impacts on the financial services sector, Webb also predicts that a potential introduction of the transaction tax in financial markets, the so-called Robin Hood tax, is likely to filter through to pension investments as well.

He said: “The Robin hood tax could work [in the UK], but which shares are going to be traded? This could happen, but it is more likely to happen outside the EU. However, it is very likely we might have a transaction tax on pensions.”

As for other tax reliefs, such as those on enterprise investment schemes, Reading said these tax reliefs could also be cut by a Corbyn government.

He said: “EIS and SEIS are very valuable because they create a more entrepreneurial environment but possibly they will be seen as [a benefit] only for the rich.”.

Recommended

deed of variation
2

Solving the self-employed pensions crisis

With no employer to fall back on, the self-employed are on their own when it comes to retirement saving. Irregular income patterns can make it harder to save regularly into a pension and commit to locking money away until age 55. Those who are building a business may see that as their biggest asset and […]

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
97

How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]

3

Which firms are winning the race on wealth management?

Traditional wealth managers have proved themselves to be scalable and profitable businesses despite the hype caused by robo-advice models, analysts say. Wealth managers have also been shown to be more robust than pure asset managers amid mounting pressure on fund performance and fees. While Hargreaves Lansdown and St James’s Place continue to make the headlines […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. No hysterical views from the above contributors which, personally, I think is quite rational. From what the tory comic books (sorry newspapers) would have you believe it would be the end of the world if Corbyn gets in. God knows the wonderful economy this government brags about hasn’t filtered down through the population, has it? And the CBI suddenly like Labour don’t they?

Leave a comment