Preparing for Corbyn Government


Due to the fixed term Parliament Act, the next formal date for a UK General Election is the summer of 2022.  Whilst a lot will change between now and then, many of our investors are trying to understand the potential impact of a Corbyn Government on their finances. 

The first point to remember is that no manifesto has been produced and as such there is a great danger that investors could get caught up in the politics of “opposition”.  However, the following issues have already been discussed by the Labour Party.


  • Increasing income tax on higher earners by reducing the threshold from £145K to £80K

  • Increasing corporation tax from the current 19% to 26%

  • A crackdown on tax avoidance

  • Increases and imposition of additional wealth taxes – increase in CGT, property taxes?

  • Introduction of Stamp Duty on bonds and derivatives


  • Increases to minimum wage

  • Public sector expansion

  • Re-nationalisation of privatised industries such as Royal Mail, railways and utilities

  • Taking back infrastructure investments from the Private Finance Initiative (PFI)


  • Further constriction of the financial sector

  • Potential for exchange control to prevent capital flight following a Labour victory


  • The Labour shadow chancellor has spoken about the prospect of a run on Sterling should the Labour Party win the next election

Interest Rates

  • The Gilt market would demand higher interest rates for the prospect of a heavy increase in Gilt issuance to meet a Labour Government’s spending objective. The institute for Fiscal Studies has predicted that borrowing would be £37bn higher in 2022 under a Labour Government compared with a Tory Government

  • Financing the gap between income and spending (the UK deficit) would rely on the ‘kindness of strangers’ – a comment from Mark Carney at the BOE.     

 UK equities                                    

  • Theoretically UK equities should fall in value due to UK companies having lower earnings for shareholders after the impact of higher corporate taxes, higher minimum wage and higher borrowing costs.  

 What is happening now?

  • Increased client interest in holding cash in non-UK accounts

  • Increased client interest in holding investments in Dublin (EU) based structures such as offshore bonds

  • Rebasing investments so that they don't mature and create a tax liability during a Corbyn government  

  • Portfolios being tilted away from the UK in favour of more international exposure


Mike Fitzhugh
Investment Director

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. Investment markets and conditions can change rapidly, and as such the views and interpretations expressed should not be taken as statements of fact, nor should they be relied upon when making investment decisions. We undertake no obligation to update or revise any forward-looking statements and actual results could differ materially from those anticipated by any forward-looking statements.

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