[Ramrod]

If Corbyn wins, the markets will be in full-scale panic

Once global investors look at the implications of that, they won’t like it at all. Labour’s ‘Robin Hood’ tax will devastate financial services, one of our largest exporters and employers. It will do far more damage than leaving the EU. After all, why pay a tax on trading shares in London when you can simply side-step it by trading them elsewhere? Higher corporation taxes, and controls on executive pay, will drive companies out of the country, and probably to a far greater extent than leaving the Single Market. It may not be to everyone’s taste, but for forty years the UK’s key competitive advantage has been that it is a relatively low tax, lightly regulated place to base a company. If that is reversed, businesses won’t stick around. Finally, a massive splurge in public spending will end up being paid for with printed money, largely because all those ‘fully-costed’ tax rises won’t actually turn out to bring in much cash. And that will hit sterling, and share prices.

The historical record suggests far-left governments are terrible for the markets. The minority Labour government led by Harold Wilson from February and October 1974 – the one where Denis Healey famously promised to ‘squeeze the rich until the pips squeak’ – saw a 50 per cent fall in the London market (although, in fairness, all kinds of terrible stuff was happening to the global economy that year). Clement Attlee’s government of 1945 to 1951 might be lionised on the left for its creation of the welfare state, but there was not a lot of wealth creation going on to pay for it all. It presided over a 7.5 per cent fall in share prices, while the Dow Jones index in the US almost doubled in the same period.

Under Jeremy Corbyn and John McDonnell, what should we expect? In reality, there will be a sudden sharp correction, simply on the shock of the result, followed by a long, painful decline as the competitiveness is drained out of the economy.