LONDON (Reuters) – Plans by Britain’s opposition Labour Party to nationalize utilities including the country’s electricity grid will damage investment as well as hurting many small shareholders, one of the country’s main business groups warned on Tuesday.
Last week, Labour published plans to renationalize the country’s 60-billion-pound ($77 billion) energy networks, taking companies such as National Grid (LON:NG), Scottish Power and SSE (LON:SSE) into public ownership.
Utilities warned this would damage investment, and on Tuesday the Confederation of British Industry’s president, John Allan, said he feared the impact would spread beyond the businesses directly affected.
“Labour’s proposals are not just a threat to these industries but to investment in our country at a time when it’s most needed, and above all to that essential partnership between business and government,” he told the CBI’s annual dinner.
Business investment fell every quarter last year due to uncertainty about how Britain will leave the European Union, and most economists think it will be lackluster again in 2019.
However, Labour’s would-be finance minister, John McDonnell, said the CBI was engaged in “disappointing scaremongering”.
“Across the world, public ownership of basic utilities such as water and energy are a normal part of the ‘essential partnership’ between business and government, providing affordable and reliable services. It is time the CBI caught up,” he said.
The CBI also criticized politicians for failing to have agreed on a plan for Brexit over the past year, and called on parliament to back the latest version of an exit deal unveiled by Prime Minister Theresa May earlier on Tuesday.
“Parliament must seize that opportunity. If not, the uncertainty will become far more acute,” Allan said.
“It’s not for business leaders to tell politicians when to trigger democratic events. But be in no doubt political failure today means economic failure tomorrow,” he added.
Labour leader Jeremy Corbyn said his party could not back May’s new offer, calling it “largely a rehash of the government’s position”, and leading Conservative euro skeptics have also said they will vote against it next month.