Labour will hike both income and corporation tax if they win the election, warn City firms

Investors believe Labour will renege on their promises and raise income and corporation tax if they win the election.

In a poll of more than 70 City institutions, six in ten expect Sir Keir Starmer’s party to hike income and corporation tax. The survey by investment bank Nomura revealed just three in ten said they expected taxes to stay flat after a Labour victory.

The findings came despite assurances from Labour, which has also been accused by Prime Minister Rishi Sunak of planning a secret £2,000 rise in taxes.

Clients surveyed include companies, pension funds, hedge funds and insurance firms, and they expect a Labour majority of 75 seats or more.

George Moran, of Nomura, said: ‘Without major changes in interest rates or the growth outlook, Labour will face tough choices on fiscal policy. 

It would be optimistic to rely on improvements in the economy.’

‘Analysts said both sides face a challenge. Ashley Webb, of Capital Economics, said: ‘If they want public spending to be higher, without raising borrowing, taxes will have to be higher.’