UK: Labour majority looks unlikely – ABN AMRO

According to Bill Diviney, senior economist at ABN AMRO, the main risk scenario for financial markets in the UK election is a Labour majority, which on present polling looks unlikely.

Key Quotes

“This may seem counter-intuitive, given that Labour favours a closer relationship with (if not remaining in) the EU.”

“The difference would be that Labour would have much more freedom to implement its radical leftwing agenda, including renationalising parts of the economy that had been privatised (such as the railways), and immediately raising the minimum wage by over 20%. This would likely have a negative impact on financial markets and business confidence, though it would also – at least in the short term – be stimulatory to growth and inflation.”