Factbox - What are the economic policies of Labour Party?

LONDON (Reuters) - Britain's opposition Labour Party, led by socialist Jeremy Corbyn, is more popular than Prime Minister Theresa May's Conservatives according to some opinion polls, and says it is ready to run the country if May's minority government falls.

Since 2015, the party has shifted its policy back toward Labour's trade union roots. The popular appeal of Corbyn's left-wing agenda proved stronger than estimated in June's national election, helping Labour gain seats at the expense of May's parliamentary majority.

Here are some of Labour's headline economic policies, taken from its 2017 election manifesto and announcements made at its party conference in September:

NATIONALISATION

Labour backs nationalising a number of previously privatised utilities. These include rail companies, energy and water networks, and the postal service.

Labour finance policy chief John McDonnell has not set out a cost of this programme. He says the nationalisation would be done by swapping government bonds for shares in the companies, at a price determined by parliament. He has said the cost of the borrowing would be covered by the profits from the industries.

The party has also proposed bringing billions of pounds of privately-funded public infrastructure contracts back under government control. It said shareholders would be compensated in the form of government bonds at a level determined when the contracts are brought back into public control. The party does not give an estimated cost for the policy.

A 2015 parliamentary report said the government owed over 222 billion pounds of charges on so-called Private Finance Initiative contracts spread across several decades.

FISCAL STRATEGY

Labour says it will take five years to close the deficit on day-to-day spending, otherwise known as the current account deficit. That deficit stood at 23.2 billion pounds in the second quarter of 2017, or 4.6 percent of the country's economic output. It excludes capital spending.

Labour have also committed to make sure that government debt is falling at the end of five years in power.

The party says it will operate under a "Fiscal Credibility Rule" designed to ensure it only borrows to invest in capital projects which will, over time, pay for themselves.

TAXATION

Labour says the top 5 percent of earners will be taxed more heavily, including the introduction of a 50 percent tax on earnings above 123,000 pounds. Companies would be subject to an "Excessive Pay Levy" if they pay an employees more than 330,000 pounds per year.

Corporation tax would increase in annual increments to 26 percent and smaller businesses would pay less tax.

Labour has also proposed new taxes on financial transactions, targeting London's world-leading trade in derivatives and bonds for a 4.7 billion pound windfall.

The party also believes it can raise 6.5 to 6.8 billion pounds per year by clamping down further on tax avoidance and evasion.

INVESTMENT

Labour has promised to create a National Investment Bank (NIB) and a network of regional development banks to tackle what it calls a failure banking system to provide longer-term funding for small and medium-sized enterprises. The party says this will transform the country's financial system, creating more accountable institutions with wider social goals.

The bank will be funded with an initial 20 billion pounds raised through the issuance of equity, which would be purchased by the government and funded by the sale of government bonds. Over a 10-year period, the NIB would then issue bonds annually to expand its balance sheet to 250 billion pounds.

The bank will lend at discounted rates to other banks, selected for their past lending performance, understanding of the NIB aims, standards of corporate governance. Labour says this will likely suit challenger banks, but it would also consider working with larger commercial banks.

Labour also said it would look at moving parts of the Bank of England to Birmingham if it wins power, saying the change is needed to reduce the economy's reliance on London's banking industry.

Corbyn has previously advocated a policy of "People's Quantitative Easing" involving the Bank of England purchasing government debt - effectively creating new money. The policy was not mentioned in the 2017 manifesto.

Morgan Stanley cautioned investors on Nov. 26 that political uncertainty in Britain was a bigger threat than Brexit given the risk of Corbyn winning power and then dismantling what was once seen as one of the world’s most stable free-market economies.

"Bankers like Morgan Stanley should not run our country but they think they do," Corbyn, a 68-year-old socialist, said in a video posted on Twitter that showed the towers of the City of London and Canary Wharf financial districts.

"So when they say we’re a threat, they’re right: We’re a threat to a damaging and failed system that is rigged for the few," he said.

(Reporting by William James; editing by Guy Faulconbridge/Jeremy Gaunt)