Jeremy Corbyn’s election as leader of the UK’s opposition Labour party at the weekend has attracted much attention from the British media.
Much of the commentary has been critical, with business daily the Financial Times’s columnist Philip Stephens suggesting that the result could upset the UK government’s assumption that the forthcoming referendum on the UK’s membership of the European Union will result in a majority for the country to remain in the EU.
“An unholy alliance of far right and far left could yet see Britain cut itself off from its own continent,” said Stephens.
Nigel Green, founder and chief executive of financial advisor deVere Group, was among the first to respond to the election result, commenting: “The victory of this hard-Left socialist as Leader of Her Majesty’s Opposition is, I suspect, going to prove to be a major issue for global investors.
“Corbyn’s economic policies fly in the face of the message that ‘Britain is open for business’. They would be detrimental to Britain’s hard-earned and invaluable pro-business reputation.
“He seems utterly determined to drag Britain back to the 1970s, an era in which the UK was strangled by high taxes and an inflexible labour market. If he thinks high taxes and inflexible labour is the way forward in today’s world, I suggest that he looks at France in the first years of Hollande’s presidency.
“On the flip side, he might like to look at the plentiful examples that prove that countries which do not excessively ‘soak the rich’ enjoy positive economic effects. So-called Corbynomics, whereby everyone would pay more tax to pay for hugely increased public spending, would backfire spectacularly.
“Mr Corbyn seems so far removed from reality that he is unwilling or unable to accept that if you significantly increase taxes and disincentivise work and investment, people will change their behaviours.
“If taxes are excessively increased, many of Britain’s most successful wealth and job creators and investors, who also support the Revenue through their significant UK income tax receipts and personal spending, will simply move to lower tax jurisdictions. These individuals have the resources to do so and will do so.
“In addition, ramping up taxes is going to make Britain a less attractive place to work for top international talent, again meaning lower tax revenues.
“In short [his] economic policies would mean reducing living standards across the board, slashing the tax base, and compromising the country’s ability to work for and with the majority.
“Instead of out-dated Corbynomics, what Britain needs to secure its long-term sustainable economic growth are further supply-side reforms, a continued and secure place within the EU – the world’s largest single market, a focus on ironing out macroeconomic imbalances, and a robust and progressive immigration policy.
“Global investors have been monitoring the UK political landscape carefully in recent times and that scrutiny will be intensified further due to Corbyn’s victory.”
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