Famed Harvard economist warns of Brexit spillover from clash

The resignations of some members of British Prime Minister Theresa May’s government and calls Thursday for a no-confidence vote over a proposed Brexit deal hammered the British pound and European stock markets.

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TickerSecurityLastChangeChange %
RBSROYAL BANK OF SCOTLAND GROUP PLC5.79+0.07+1.22%
BCSBARCLAYS PLC.8.78+0.05+0.57%
LYGLLOYDS BANKING GROUP PLC3.01+0.02+0.67%

According to Harvard University Economics Professor Martin Feldstein the prospect of the British government’s collapse is making waves across the English Channel.

“If the government falls and there’s an election, the Labour Party could win,” he told FOX Business’ Stuart Varney on Thursday. “The Labour Party is a kind of a crazy left party… so it would be a hark back to the 60s-type Labour Party nationalizing things, raising taxes so it would be very serious for the British economy and could spill over into Europe.”

U.K. domestic-focused stocks such as homebuilders and Royal Mail are bearing the brunt of the equity sell-off. Shares in the Royal Bank of Scotland plummeted more than 10 percent, the most since June 2016, on the possibility of Labour leader Corbyn taking control.

Shares of U.K. banks Barclays and Lloyds also fell.