LABOUR’S manifesto is as long as it is ambitious. Over 123 pages of sometimes dense prose, the party promises to “upgrade” the economy and “transform our energy systems”. This would involve the nationalisation of the water system, the energy-supply network, Royal Mail and the railways. Britain’s infrastructure is indeed due for an upgrade. But Labour’s plans would be costly—both in the short and long term.
The first challenge would be to move privately held firms back into public ownership. The government might ultimately need to fork out over £60bn ($78bn) for the water industry, a similar amount for National Grid (which runs electricity- and gas-transmission networks) and £5bn or so for Royal Mail. Borrowing such large amounts would put upward pressure on government-bond yields, which would ripple through the economy into mortgages and corporate-borrowing costs.
Nationalising the…Continue reading