Search the Centre for Economic Performance Website
Investorschronicle.co.uk: Labour and sterling
11 November 2019
Not quite. The problem is uncertainty. A Corbyn government would break with the economic policies we have been accustomed to since the 1980s. This alone generates uncertainty. And the clichè is right; markets really do hate uncertainty. We can measure policy uncertainty by an index constructed by Nick Bloom, Scott Baker and Steven Davis. Since this index began in 1998 it has been significantly negatively correlated with the real $/£ rate. Higher uncertainty, then, means a weaker pound.