Jeremy Corbyn, as the leader of the Labour Party, has proposed some radical investment management policies, which have caused heated discussions. This article analyzes the possible impacts of Corbyn’s policies on the future development of the UK investment management industry.
Tax increase plan causes worries of fund managers
Corbyn proposed to increase the corporate tax rate from 19% to 26%, which is expected to reduce after-tax earnings per share of FTSE 100 companies by about 9%. Potential losers include utilities facing nationalization, as well as oil and gas companies.
Outflow risks of hedge funds and foreign capital
The tax increase plan makes the UK a less attractive place for foreign capital. Some hedge funds have already moved out or closed doors to outside capital. The future development faces challenges.
Shift towards domestic market
No matter who wins the election, the focus of the UK market is likely to turn inwards in the next few years due to Brexit challenges.
Corbyn’s proposed policies bring uncertainties to the future development of the UK investment management industry. Tax increases and nationalization plans worry fund managers, while Brexit challenges lead to a shift towards the domestic market.