The head of Britain’s biggest business lobby group has attacked Labour’s nationalisation plans as potentially just as damaging to the economy as Britain leaving the European Union without a deal.

In a speech on Monday, Paul Drechsler, the CBI president, said renationalising large parts of the economy would cause serious harm to the UK’s reputation as a place for international investors, which he argued would be as bad as a hard Brexit and would damage job prospects and living standards.

“So you want to nationalise energy, rail and water, and bring public services contracts back in house? Let’s see the evidence that it will deliver a better service to consumers at a lower cost,” he said.

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The intervention by the lobby group – which represents about 190,000 companies, including transport and utility firms – constitutes a warning from the boardrooms of corporate Britain that they harbour concerns over Labour’s plans for the economy despite supporting the party over its stance on Brexit.

The CBI was among leading business voices supporting Jeremy Corbyn’s move to keep Britain in a customs union with the EU. The lobby group warned before the referendum that Brexit could lead to almost a million job losses and cost the economy £100bn – the equivalent of 5% of GDP – by 2020.

Drechsler challenged Labour to provide evidence that its plans would lead to a better service for consumers at a lower cost. He said private investment had helped create jobs and improve the efficiency of utility companies since they were sold off under the Thatcher government of the 1980s, and argued that progress could be undone if they were taken back into state control.



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However, utility companies and railway operators have faced intense pressure over their service standards and prices at a time when households are under increasing financial strain. Public support has swung behind Labour’s plans for greater state control of several key industries – shown in recent polls that suggest widespread backing for nationalisation of the railways, water, gas and electricity.

The Conservatives under Theresa May have also attacked utility companies, proposing plans for a price cap on “rip-off” energy bills. Michael Gove, the environment secretary, has also called for a crackdown on excessive executive pay and offshore financial arrangements within water companies.

Labour estimates that £13.5bn in dividends has been paid out to shareholders by private water companies since 2010, during a time of rising prices for consumers.

A spokesman for the party said it wanted to improve the competitiveness of businesses, and ensure that workers and consumers were protected against “failing markets and exploitative practices”.

“Our plans to bring privatised services back into public ownership are part of our wider plans to build a high-wage, high-skill economy of the future that will benefit not just the wider business community but also the long-term sustainability of our economy,” the spokesman added.