Is the market underestimating the UK Labour party?

The U.K.'s opposition Labour Party may secure victory in next year's general election, according to some polls – yet investors are not properly pricing in the risk that might pose to U.K. investments, according to analysts.

"Although polls suggest a Labour victory, I don't think investors are expecting a change of government and what that would mean," Tina Fordham, chief global political analyst at Citi, told CNBC.

"UK political risks are underpriced."

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On Monday, a poll by Populus suggested a 6 percent lead for Labour, with 37 percent of respondents saying they would vote for the party, ahead of 31 percent for the Conservatives (Tories).

The Labour Party has traditionally been viewed as less business-friendly than the Tories, their main rivals for power for most of the last century. That changed during the regimes of Tony Blair and Gordon Brown between 1997-2010, when the party moved closer to the City and business interests. Since then, new leader Ed Miliband has taken the party further back to the left, and hasn't courted the City in the same way.

Ed Miliband Labour Party
Jeff J Mitchell | Getty Images

He has also announced plans for higher taxes on the wealthy, and measures which may limit profits for certain industries. If a Labour government came in, policies are likely to include: a further tax on properties worth over £2 million ($3.2 million); a freeze in energy prices and a hike in income tax for those earning over £150,000 a year.

"Miliband has never succeeded in getting a good soundbite, or clear vision, on the economy," John Curtice, professor of politics at the University of Strathclyde, and one of the best-known poll analysts in the U.K., told CNBC.

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Any threat to the U.K.'s place in the European Union, particularly a "Brexit" from the EU, would roil markets.

A U.K. exit from the EU might look more likely under a Tory government, as Prime Minister David Cameron has promised a referendum on the issue, but Miliband is coming under increasing pressure from powerful trade unions to do the same.

The Labour Party is far from assured of victory.

The Tories took a narrow lead (just 35 percent versus 34 percent for Labour) in a poll by YouGov for the first time since March 2012, released Thursday night.

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While there has been plenty of focus on the threat to the Conservative Party from Nigel Farage's U.K. Independence Party, it is also posing an increasing threat to the traditional Labour vote by making inroads among the older, white working class. UKIP's voters are "socially conservative but probably more typical of Labour supporters, not Conservatives," Alastair Newton, senior political analysts at Nomura, wrote in a research note.

He forecasts "a tight outcome and another hung parliament"- probably with the Labour Party in coalition with the Liberal Democrats, currently junior coalition partners with the Tories.

"Labour's position in the polls is weaker than it has been for a while," Curtice said. "They don't have any cushion for comfort."