Take Brexit Britain and Trump’s America. Add climate change, instability in the Middle East, cryptocurrencies, and self-driving cars… and you have the world in 2018: hopeful, yet seemingly unpredictable.

We have assembled 11 unlikely events that - if they somehow happened - have the potential to profoundly affect the world as we know it.

To assess the political, economic, financial, and social impacts, IG brought together global economic/political experts to give their perspectives and predictions.

Explore some of the great unknowns facing us all today

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What If

A snap election in the UK makes Jeremy Corbyn prime minister

Pic: Chatham House

Arguably one of the more divisive figures of modern politics, Labour leader Jeremy Corbyn won two leadership elections despite not having the backing of a significant chunk of his own party. In 2017, he managed to gain seats in a surprise general election, against media expectations. But could the outspoken MP and his ragtag shadow cabinet ever get to Number 10?

Category: Politics Region: Europe

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Our panel of experts (interviewed March-May 2018):

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

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Robert Kelly is a Professor in the Department of Political Science and Diplomacy, Pusan National University in South Korea. His work focuses on international security and political economy. His areas of interest are East Asian security, US foreign policy, the Middle East, the World Bank and the International Monetary Fund. Kelly has appeared as an analyst on television news services, including the BBC and CNN.

Ben Page

Ben Page

CEO, Ipsos MORI

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Ben Page is Chief Executive of Ipsos MORI. A graduate of Oxford University, Page is a frequent writer and speaker on trends, leadership and performance management. He has previously worked for companies including Shell, BAE Systems, Sky TV and IBM. Page has also worked closely with ministers and senior policy makers across government, leading on work for Downing Street, the Cabinet Office, the Home Office and the Department of Health.

Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

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Chris Beauchamp started at IG in 2010, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News. His background is in equity research and analysis, and he uses these skills to provide in-depth reports on stock market movements.

[ What if this happened? ]

Robert Kelly
Robert Kelly
There would be a major swing to the left in British foreign policy. Corbyn has a long history of equivocation on countries like Russia and groups like Hamas. This could lead to a falling out with the US, but likely not a deep breach.
Ben Page
Ben Page
Nobody knows. Does John McDonnell announce immediately that we are renationalising the railways and are not giving the owners any money, or the water industry or something? We’ve still got 80% of the cuts to go in welfare that are scheduled. We’ve still got the NHS crying out for money. I mean even the Conservatives now are talking about having a high propagated tax.
Christopher Beauchamp
Christopher Beauchamp
We would expect a drop both in sterling and the FTSE, plus a rise in UK borrowing costs, assuming that the new government would increase spending and taxation, hitting economic growth.

[ Likelihood ]

We asked our experts to rate how likely it is that a snap election will make Jeremy Corbyn Prime Minister.

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[ Impact ]

Panel members also rated the impact they would expect this event to have.

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The Political Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

If a snap election in the UK made Jeremy Corbyn prime minister there would be a deep polarisation of British politics as Corbyn alienated centrist and conservative voters. There would also be a radicalisation of the British right. This would be a disaster as it would likely see the rollback of some of Thatcher’s reforms that got the UK moving again. But the biggest question would be in regards to foreign policy. Corbyn has trucked with some genuinely disturbing figures, which many in the West would consider anti-Semites, terrorists, and so on. He is lukewarm on Britain’s ties to Europe and the US. I wonder if he would consider leaving Nato. At the very least, Britain would likely retrench from the Middle East, and the special relationship with the US would be over.
Ben Page

Ben Page

CEO, Ipsos MORI

There are people all over the political spectrum saying you need to do something about council tax and there’s a possibility Corbyn might introduce a mansion tax. It’s crazy that a billionaire in a £70 million house pays the same as somebody else in a house in London that is now worth £1 million.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

It depends on the flavour of the government he brings with him, how many moderates he has, and whether they moderate their policies. Assuming they rose to power in a fairly solid way, you would then have a more left-wing government at odds with Nato – and that would be at odds with the US, especially at the moment, and even with the rest of the EU. Corbyn’s criticism of Europe has always been from a left-wing perspective, so that’s unlikely to provide much solace for fans of the EU at this point. Britain would also reduce military spending with the aim of playing a smaller part within Nato, if not outright withdrawal, and that would leave the UK isolated from a lot of its key allies across the globe.

The Economic Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

There would be a slowdown as foreign capital seeped away in anxiety and as Corbyn pursued a traditionalist 1970s-style leftist economic programme. There would be inflation as the costs of the socialist programme kicked in.
Ben Page

Ben Page

CEO, Ipsos MORI

Generally, there would be anxiety about rates of economic growth. To be honest, it’s almost certain that, regardless of who wins the next election, taxes will have to go up in Britain to pay for public services. There would be a boost to the economy from more spending on public services in the short term, but then potentially more inflation as money is pumped into the system and public debt increases. It really would be uncharted territory. Politics would be very polarised, with the mainstream media becoming almost hysterical. The question is how would Corbyn and McDonnell actually govern. The young would be pleased, the old less so, but how this evolves over time would be fascinating.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

If you see a slowdown in economic activity, if growth takes a hit, then confidence suffers, particularly in the service industries. Finance obviously would be a prime target, in terms of tougher regulations on banks. Then you might see a rise in job cuts, more companies moving overseas and some banks moving to Europe, particularly Ireland, and the US. So that would be the first hit and there’d be knock-on effects from that. The risk is that higher taxes would discourage further economic growth among businesses and further spending in investment. That, in turn, would see a reduction in consumer spending and incomes hit, and the cycle would then take off from there.

The Financial Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

There would be a dampening. Capital flight would occur and worsen the more Corbyn pursued a real socialist platform. Combined with Brexit, this would push the financial capital of Europe from the City of London to Frankfurt.
Ben Page

Ben Page

CEO, Ipsos MORI

The expectation would be that sterling would fall. Of course, sterling falling is actually generally good for the stock market as the companies mostly earn money abroad. There would be a short-term confidence shock in the markets, with shares of industries to be nationalised rising or falling depending on the proposed mechanism.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

You’d see quite a bit of money moving out of UK government bonds, on the expectation of high government borrowing, and people selling sterling, moving to the euro and the dollar. People expect UK growth to stall, higher taxes will add to that pressure, and you can then start to see how the feedback loop begins to play through. That would hit sterling and you’d see people leaving UK government assets, as well as looking to sell the pound. This will then continue to bear down on the pound. Weaker economic growth tends to leave the Bank of England needing to cut rates, or leads to further quantitative easing, and that will also tend to be negative. So you can see how all these things tend to join together and impact each other.

The Social Impact

Ben Page

Ben Page

CEO, Ipsos MORI

Obviously there would be tax rises, but there also would be more public spending, so he would presumably take all the caps off public sector pay. So there might be positive effects, but there would almost certainly be quite a lot of turbulence.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

It depends on the economic policies but you’d likely see higher taxation. The higher-earning segments of the population would find they would face higher taxes as a result of a Corbyn government, which would be likely to hit consumption across the board and in key areas. This would have a short-term benefit of increasing the tax take, but would slow economic growth in the long-term. In a similar way to what we had in the 1970s, the high tax rate would discourage economic activity and that would be the risk over the long term, that you’d see that feeding to the broader economy.
Robert Kelly

Robert Kelly

There would be widespread confusion in Britain as an old-school Marxist became PM. The whole world would wonder what happened to the reliable UK after both Brexit and Corbyn.

Find out about another risk facing the world in 2018 and beyond

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…Trump wins a second term?
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…the Qatar world cup is moved to another country?
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…Britain crashes out of the EU without a deal?
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