From the Daily Telegraph
Britain risks turning into France under Labour government, warns Bank of America:
A Labour victory in May’s general election would lead to the UK economy coming to resemble struggling France, one of the world’s leading investment banks has warned.
Bank of America Merrill Lynch said that Ed Miliband would “seriously interfere with the private sector”, binding businesses in red tape and discouraging investment in the UK.
In a research note published on Friday, The economists predicted that a Labour-led government, governing alone or in a left-wing coalition, would mean an economy structured like France, which has strict laws on working hours, minimum wages and contracts.
As a result, the UK would be less likely to grow strongly. The research, from Bank of America’s European economists, is the latest warning that a Labour government would be bad for business.
“A left wing coalition around Labour, would, in our view, continue to deliver on fiscal austerity, albeit a milder version than the Tories, with the accompanying cyclical headwind that this entails, while embarking on structural changes which could in the medium run reduce the appeal of the UK as a business location and trigger, ultimately, a deterioration in potential GDP growth,” it said.
“In a nutshell, the UK would look increasingly like France.”
Bank of America’s economists said that unlike the previous Labour government, which welcomed investment in the UK and deregulated industries, Labour would be unable to massively increase public spending.
The only way Miliband could play to his core support, then, would be attention-grabbing interventions such as a major hike in the minimum wage.
An £8-an-hour minimum wage would put the UK on a par with France in terms of the minimum wage as a proportion of median incomes.
“In our view, a Labour government in power, to deliver the goods to its traditional base – will have no other option, this time, but to seriously interfere with the private sector,” Bank of America said.
“If a centre-left government cannot tackle inequality through social transfers, it will be tempted to focus on fighting “primary inequality”, for instance by imposing a massive increase in the minimum wage.”
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