The election has transformed expectations and confidence within Labour
With so much focus on whether Theresa May will survive – or perhaps more accurately, for how long – it’s an opportune time to have a look at the same bet on the other side. After all, the value is often there to be had when people aren’t paying enough attention.
And value there must be for the simple reason that the Corbyn Exit Date market has perhaps the single worst bet I’ve ever seen on British politics. He is 5/1 to leave this year with Ladbrokes, and 8/1 with Paddy Power for each of the third and fourth quarters of this year. Treat these odds as if you could catch ebola from them.
There are three ways that leaders go. They might be forced out, they might choose to go of their own accord, or health issues might intervene. These departure paths overlap of course but they’re still a useful model.
Corbyn will not be forced out. He could not be prised from office when Labour was behind in the polls by double-digits; he certainly won’t go now that they’re comfortably ahead. Indeed, for all the grumbling (and there’s been much less of it since the election), there won’t be any attempt to oust him in the near future: his stock has soared with party members and, for that matter, with MPs. The willingness of former critics to get back on board is not solely down to left-wing pressure locally. Indeed, that is likely to be a relatively minor factor. Far more important is that Corbyn far exceeded expectations, which has caused many to reappraise him in a rather more glowing light.
Nor is there any meaningful chance of him stepping down of his own accord, now that he finally appears to have found his feet. Having clung on for dear life when his position was far beyond tenable in any normal circumstance, why would he go when all is rosy and when the project is far from finished?
As for health, that is always a potential concern. Leading a major political party is a demanding role and Corbyn is 68. However, he looks in good health and his leadership style is such that he is better than most at keeping the job from becoming all-encompassing. The breathing space that the Labour gains at the election have given him should also have reduced his stress levels.
Put simply, we are reduced to Black Swan events in this market for this year. If I had the money, I’d be quite happy to lay the event at up to 50/1, never mind 5/1. I wouldn’t want to be buying until the price reached well into three figures.
All of which means that with an overround of 7.3%, there must be value elsewhere. Where?
Not in 2018, at 5/2. A lot can happen in a year, particularly in British politics at the moment. All the same, the difficulties of Brexit, an economy on the downturn, uncertain fiscal policy and an untrusting party will make life particularly hard for Theresa May through to at least 2019 – if she stays that long. If she does, Corbyn is unlikely to face anything like the pressure that he did during May’s first nine months in office. His Brexit stance will be a difficult issue for a lot of members but for most it won’t be a red line. In any case, there may not be many big Brexit votes this year or next to bring the divide into sharp relief. Labour will be able to hit and run on specific topics as they see fit. Even if May does go and is replaced by someone with better political antennae and communication skills, that’s not going to affect the fundamentals.
Which leaves 4/1 for 2019 and 11/8 for 2020 or later. Both of these offer value, although tying money up for two and a half years at not much better than evens won’t be attractive to many. There is a case to be made for 2019. Brexit is likely to be complete by then, if only in the form of a transitional deal. There could well be a new Tory leader or even a general election. Corbyn will be 70 by then and an underperformance might be viewed more harshly than now. Labour might also have passed the McDonnell Amendment by then, enabling Corbyn to try to hand over the baton to a protégé.
But there’s also a good case for 2020 or beyond, which is essentially the extension of why it won’t be this year: staying in office is the default option and unless he is pushed out or chooses to jump then he stays – and pushing him out will be very hard.
If I was being boring, I’d back both 2019 and 2020. The slightly more adventurous option, and probably the better value, would be to go for 2019 alone.