Labour Party proposals to force large companies to establish funds holding equity for employees could threaten London’s ability to compete as a place to list their shares, at a time when Brexit presents a potential opportunity.

The plans outlined by shadow chancellor John McDonnell would oblige companies with more than 250 employees to set up so-called inclusive ownership funds. The funds would own up to 10% of the company’s equity on behalf of staff, and would pay out dividends every year. Each person could receive a maximum of £500 in dividends per year, but anything above that level would be poured into the government’s coffers.