Businesses are being warned to step up preparations for a government led by Jeremy Corbyn, amid the growing threat of a general election.

The trade body representing investment firms has told members that the prospects of a Labour prime minister are growing, with the two main parties "neck and neck" in the polls.

The Investment Association said the industry needed to "step up" attempts to influence Mr Corbyn's policies, citing his plans to nationalise rail and utility firms and impose a new levy on financial transactions.

In a private briefing to members, which include JP Morgan and Morgan Stanley's investment arms, it warned of "infrequent 'meaningful engagement' with industry from the very top of the party" and an "inbuilt scepticism of the City".

The disclosure comes as John McDonnell, the shadow chancellor, separately announces plans to use the Royal Bank of Scotland, which is 62 per cent owned by the Government, to hand out loans to small and medium-sized companies from a new £250 billion national investment fund.

Mr McDonnell is proposing to build a “new public banking ecosystem” as part of his plans to halt the Government's sales of its shares in RBS. Under the plans, branches of RBS saved from closure would be used to lend to "small and medium-sized enterprises, start ups and co-operatives in every region and nation of the UK", from a pot he first announced in 2016.