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UK Inc cheers Johnson win, but Brexit still looms

Johnson’s win laid to rest concerns about Labour leader Jeremy Corbyn’s radical plans to nationalise swathes of British industry and impose onerous rules on business, such as handing workers as much as 10% ownership in companies. Still, for many companies Brexit remains a worry, and executives urged Johnson to take his time and strike a business-friendly deal with the EU.

Bloomberg|
Dec 13, 2019, 11.36 PM IST
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By Joe Mayes, Tom Metcalf & Benjamin Stupples

LONDON: UK Inc breathed a sigh of relief after Boris Johnson’s lopsided election victory, cheered by his pro-enterprise agenda and an end to the political paralysis that had left Britain’s relationship with the European Union in limbo.

Johnson’s win laid to rest concerns about Labour leader Jeremy Corbyn’s radical plans to nationalise swathes of British industry and impose onerous rules on business, such as handing workers as much as 10% ownership in companies.

Still, for many companies Brexit remains a worry, and executives urged Johnson to take his time and strike a business-friendly deal with the EU. “The prime minister must resist the urge for arbitrary negotiating deadlines,” said Jonathan Geldart, director general of the Institute of Directors. “The content and shape of any new deal are much more important than simply the speed in getting there.” Brexit aside, here’s why Johnson’s win looks like good news for specific parts of the economy.

Finance and the city

Many investors feared that Corbyn’s plans to increase corporate taxes, raise the bank levy and give workers equity ownership would’ve led to capital outflows and damaged the City of London. Johnson’s parliamentary majority removes that threat, a boost to firms like Lloyds Banking Group and state-controlled Royal Bank of Scotland Group.

Utilities

The Labour Party's defeat and Corbyn's decision to stand down before the next election effectively ended the possibility of a broad nationalisation of the industry.

Construction
A headline Conservative economic pledge is to borrow an extra £20 billion ($27 billion) a year to spend on capital projects like railways and roads. The increased investment, plus higher general economic confidence, would be a boost for contractors like Balfour Beattyl, Costain Group and Keller Group.

Retail
A reduction in economic uncertainty from the Conservative victory may boost consumer confidence, a positive for retailers such as Next and Tesco, as shoppers become more confident to spend.

Housebuilders
A reduction in Brexit uncertainty under Johnson stands to boost home-builders like Barratt Developments and Bovis Homes Group, plus real estate investment trusts such as Land Securities Group and British Land, which have struggled amid the confusion over Britain's break from the EU.

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