Planet Normal: A Labour government will only appease markets in the short term, says top economist
‘I think that the markets probably will take a Labour government reasonably well. I still have some big concerns, though.’
On the latest Planet Normal podcast, which you can listen to using the audio player above, columnists Liam Halligan and guest co-host Baroness Claire Fox speak to independent economist Julian Jessop about how he thinks a Labour government would fare economically.
“What investors really want is certainty and stability. I think some would see a change of government as a positive simply because things will be more stable for a while.
‘Rachel Reeves has recommitted to a lot of things that the Tories had stuck with, particularly the fiscal rules, which will be tying her hands quite a lot on some of the crazier things that she might want to do.
But the economist goes on to tell Planet Normal that he still has some alarm bells ringing about how a Labour government will approach some elements of the economy.
‘First of all, I think it’s inevitable that the taxes will have to rise further under Labour than they might have done under the Conservatives.
‘The second thing that concerns me is their close links to unions. I think there’ll be lots of things done in the labour market, [such as] bigger increases than minimum wage, things that Labour would describe as improvements in workers rights, but which could actually backfire in terms of reducing employment opportunities.
‘The markets will be pleased there’s more certainty, but I think there are lots of little things that [Labour] will do on tax and on the labour market in particular, that I think will undermine growth and probably means that unemployment is higher than it would otherwise have been as well.’
Listen to Planet Normal, a weekly Telegraph podcast featuring news and views from beyond the bubble, using the audio player above or subscribe for free on Apple Podcasts, Spotify or your preferred podcast app
