The UK Labour Party has been consistently ahead in

the polls for the last 18 months. Given the current

economic and political environment, our base case is

that it forms the next government.

This is the first in a series of Insights considering what

a potential Labour government would do, and what this

would mean for the economy and markets.

We start with Labour’s approach to green industrial

policy, where its policy platform is most developed.

Influenced by the approach of the Democrats in the

US, Labour’s strategy seeks to leverage government

investments and subsidies for decarbonisation and

green energy to crowd-in wider private sector

investment in domestic manufacturing.

The Party has said it will spend £28 billion per year on

green projects by the middle of the next parliamentary

term. While this is likely to be revised down in time, it

would still represent a huge increase in spending

compared to the roughly £8 billion spent per year now.

Labour’s ambition comes with risks. Most notably, the

breadth and speed with which it hopes to act will leave

it vulnerable to driving funding towards inefficient or

unviable emerging technologies. Without further

amendments to its plans, Labour is unlikely to be able

to deliver all its commitments on time.

Nevertheless, opportunities for private sector

investment in renewable energy and decarbonisation

projects will likely increase alongside greater

government investment.

Read the full article