London financial market: Don’t let Labour ruin it

There's a good chance the next UK government will be left-of-centre Labour, whose previous terms of office have usually ended in inflation and currency crisis. Soft-spoken Labour politicians can't allay fears - among foreign investors and City practitioners - that a change of government will trigger a market correction and more controls on the financial sector. The reason for the fears: new-look Labour's overtures to private capital are vague and non-committal. Even Labour supporters are saying it's time to put flesh on the bones. By David Shirreff

Imagine you’re in Boston managing a portfolio of international equities. It’s 14 months to a UK general election which the left-of-centre Labour Party will probably win. What do you do?

Nothing. It’s too early to tell whether the effect of the election will be more than a blip on the political-economic map of Europe.

However, the wise Bostonian is gathering information about Britain’s new-look Labour Party. This may help him or her decide if a change in government will trigger just a small correction in the UK markets or a fundamental change.

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