It usually takes time for established preconceptions to catch up with reality. For political parties, conventional wisdom about their characteristic strengths and opponents’ weaknesses is their bread and butter. It underpins David Cameron’s now famously ironic tweet, ahead of the 2015 election, that the British faced a choice between stability with the Conservatives, or chaos with Ed Miliband. The tweet now stands, like Ozymandias’s hubristic boast, “Look on my works, ye mighty, and despair!”, an inscription on a diminishing Conservative party that has spent the last two years cannibalising itself.

And yet, many have still not caught up with the new reality of the Conservatives, because there is another side to the party where perceptions haven’t changed. Last week the Wall Street Journal published a report announcing that there was only thing investors in the UK feared more than Brexit: Jeremy Corbyn. “It isn’t just Brexit that has investors on edge in the UK,” the article warned, “it’s the possibility of a new Labour government run by an avowed socialist.” Quotes from analysts described a Labour victory as a “lose-lose proposition”, “apocalyptic” and “Armageddon”.

This was a curious angle to take, given the last two years in general, and the last two weeks in particular. One headscratcher features someone opining on how a Labour government would hit sterling, a currency that reached 18-month lows the week the article was published, and which the Bank of England is forecasting might reach parity with the dollar after a hard Brexit.

The Labour-as-doomsday scenario is contemplated by money men with little idea of real life under the Tories. Yet business leaders’ faith in the UK is already plummeting. According to the Financial Times, Britain’s retail investor confidence is at the lowest level since 1995, when records began. The apocalypse is already upon us.

‘‘It isn’t just Brexit that has investors on edge in the UK,’ warned the Wall Street Journal.’ Jeremy Corbyn at the European socialist congress in Lisbon. Photograph: Pedro Nunes/Reuters

When facts do not change perception, we are firmly in the ground of ideology. The Tories themselves have clearly announced the break with business for the sake of another ideology they hold dearer – Brexit. Tory MPs and ministers say “fuck business”, hide from business leaders and insult the Bank of England governor. Their economic credibility, even literacy, is shot, promising £20bn for the NHS from a phantom “Brexit dividend”. The UK boss of ThyssenKrupp said only last month that the Conservatives have “failed business” by not making decisions to benefit the economy, but “to prevent an implosion in their own party”.

None of the anchors are there any more. The institution that likes to think of itself as the natural party of government has none of the qualities – stability, internal cohesion, economic pragmatism – it once prided itself on. Its key economic policy over the last eight years – austerity – has now been roundly debunked by economists, including at the Internatonal Monetary Fund. Yet still it marches on: a zombie idea, advanced by a zombie party. And with the Tories’ main foreign policy reduced to attacking friends and standing by those who don’t have the country’s best interests at heart, the Tories have vandalised the last of their alleged traditional strengths.

But the established consensus is so skewed against the left, so anchored in outdated ideas about “winters of discontent” and economic bailouts, that, despite the Tories’s unravelling and the impending cliff edge of Brexit, a Labour government is still regarded as somehow more risky for the economy. This bogeyman is the only weapon the Conservatives have left, and so Theresa May has retreated from the “stability with us” point that Cameron made in 2015, and focuses on the “chaos” part. She has no other way to promote the Tories anymore: no positive vision for the future, no economic dividends from austerity, no harmony within her own party and no friends on the global stage.

But, of course, whether the fearmongering comes from the Conservative party or Wall Street Journal, the real threat they fear from a redistributive Corbyn government isn’t to economic stability, but to economic ideology. Hacking back the public realm in favour of the private sector has for too long been accepted as indisputably effective, despite all evidence to the contrary. But events on the ground are fast overtaking these entrenched biases.

Brexit has laid waste to the Conservative party and its economic orthodoxy, its slogans now mere etchings on colossal ruins. For its leaders, and their allies in the markets, there is indeed only one thing to fear more than a hard Brexit; and that is that biases dissolve quickly enough to usher in a Labour electoral win, and make it the new natural party of government.

• Nesrine Malik is a Guardian columnist