Big win for Labour and deal on Europe could produce UK rebound

BRITAIN is only months from a general election. A victory for the Labour party, after 14 years in opposition, looks near-certain, but several developments could upset that outcome. A Labour win, a steady course for economic policy and a fillip to growth and investment through effective rapprochement with the European Union, could produce a rebound for UK financial markets and sterling. The chances that these three factors will coalesce are less than 50 per cent, but the upside prospects for the UK are real and cannot be ignored.

With Keir Starmer, the opposition leader, benefiting from a consistent Labour party opinion poll advantage over the Conservatives of 20 percentage points and more, the election is his to lose. In football terms, Starmer has an open goal in front of him and plenty of games to spare.

The perils for Starmer are two-fold, but both can be managed. An incoming Labour government tends to incite unfulfillable expectations from the Left, which in turn raises fears of a business and financial markets backlash.