Matthew Lynn Matthew Lynn

If Corbyn wins, the markets will be in full-scale panic

Friday morning. A humbled looking Theresa May is muttering about how ‘defeat means defeat’, while Boris Johnson readies his leadership bid. Nicola Sturgeon is flying down to London with a list of demands for supporting a Labour-led coalition. And Jeremy Corbyn is finishing off some work on his allotment before hopping on a bus to the Palace. It might sound far-fetched. But the polls are so all over the place, it is no longer impossible that the Tories will lose their majority.

If it happens, one point has been overlooked. Over in the City, stocks will be getting trashed, and the pound will be in free-fall. The markets have only just begun to contemplate what a Corbyn-led Labour Government would be like, but have hardly paused to give it any serious consideration. In the run up to the EU referendum, the pound was already wobbling, but so far it has hardly reacted to the narrowing of the polls – in fact, it is slightly up against the dollar since the campaign opened, while the FTSE has risen by more than 300 points.

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