Business leaders were treading carefully in their approach to the new Labour leadership on Monday, saying only that they want to meet the new shadow cabinet to get more details on the policies Jeremy Corbyn outlined during his leadership campaign. These included taking public control of the energy industry, hiking taxes and his “people’s QE” - electronic money-printing to spend on infrastructure.
City traders appeared largely unworried about the new Corbyn-Tom Watson-John McDonnell Labour team. The FTSE 100 index was little changed, ending 33 points lower at 6084. Shares in the UK’s big banks, threatened with nationalisation by new shadow chancellor McDonnell, were slightly lower, but there was no sign of a big sell-off. Energy company shares were also little moved in stark contrast to the panic that set in two years ago when Ed Miliband threatened the sector with price capping.
Laith Khalaf, senior analyst at stock brokers Hargreaves Lansdown, said: “We’re five years away from a general election. I don’t think the Labour policies are going to have much of an impact until markets can say ‘yes, we’re a year away [from a general election]’.”
John Longworth, director general of the British Chambers of Commerce, said he hoped the new Labour top team was “as anxious to speak to us as we are to them”. He said: “The truth of the matter is, we don’t know what Labour party policy is yet.” Longworth is supportive of Corbyn’s calls for investment in infrastructure and skills.
The employers’ body, the CBI, said it was preparing to write to Corbyn and his shadow cabinet. John Cridland, director general of the CBI, who criticised Corbyn’s plan for people’s QE last month, said: “The country needs a strong opposition and businesses will want to see the new Labour leader and his team supporting a pro-enterprise agenda that will spur growth and create jobs up and down the United Kingdom.”
The CBI chief also welcomed the appointment of Angela Eagle as shadow business secretary, saying “business has worked positively with Ms Eagle in the past”.
However, although the stock market shrugged off the changes at the top of the Labour party, analysts warned that such complacency could be misplaced. Analysts at Investec said: “A number of unexpected events have occurred in the political landscape over the past year or two (an example is the SNP’s dominance in Scotland).
“It would be unwise to exclude the possibility of Labour presenting a serious challenge to the Tories if it manages to strike a chord with voters on key issues or if the government performs poorly. Under this scenario, the leftwing agenda of the Labour party could become a live issue and begin to rattle UK markets.”
