Earlier this month Britons hit the polling booths across the country to decide who would be running their local councils. Usually the local elections don’t garner a huge amount of interest, but given the polarised state of politics in the UK at the moment, it provided an interesting opportunity to try and establish the odds of a Corbyn led government come 2022.
The outcome – The Conservatives lost 2 Councils and 35 councilors. Labour did not lose or gain any councils but did gain 79 councilors. The Lib Dems had the most success gaining 4 councils and 75 councilors. The biggest losers were UKIP who faced pretty much total annihilation losing 123 councilors, leaving only 3 remaining.
For Labour, whilst this is not a loss, it can’t be considered a win either. Whilst the polls show an increase in support for Corbyn, the result is certainly a sign that the momentum that Jeremy had is slowing down. If we have learnt anything from the last 2 years in politics, it’s that polls are not an accurate indicator of what the outcome will be, making the election data particularly valuable when forming a prediction for the future. However, the conservatives are clearly becoming less popular and if the polls are to be believed then there is certainly still a chance for Corbyn.
What could a Corbyn government mean for investors?
Well frankly, nothing good. Morgan Stanley described him as a ‘worse threat to British business than Brexit’ and the vast majority of financial institutions and commentators seem to agree. To simplify the whole situation, Corbyn comes with many plans that attempt to balance the books, so to speak, between those who have and those who have not. The most inevitable of those plans would be a tax increase.
In fact the very prospect of Corbyn getting in has already stirred some into action. Edi Truell, a private equity investor was quoted in the Financial Times saying, “The rise of Jeremy Corbyn has not made me feel that relaxed, I would be devastated if he got into power. It would be disastrous. I’ve heard from investors who say ‘we don’t want to invest in the UK, not because of Brexit but because of Corbyn’.” He then proceeded to move his entire family fortune of £250m out of the UK to Switzerland.
What should your advisor be talking to you about?
One of the most important parts of planning is wealth preservation. Expats generally benefit from inflated salaries and if they’re lucky like those of us in the UAE, no tax on income. However, it takes courage to re-locate to a foreign country and most sacrificed being close to friends and family back home, so it is essential we make it count to the fullest. Therefore, offshore tax efficient savings vehicles such as portfolio bonds, should be utilised as much as possible to ensure what we earn, we keep, and it can be passed to those we care about as tax efficiently as possible.