Richard Buxton, chief executive of Old Mutual Global Investors and manager of its £2.3bn UK Alpha fund, has said the biggest risk for the UK economy for 2018 is politics and the fact markets are not pricing in a potential change in leadership.
The manager said the "main disaster of this year" was Prime Minister Teresa May's decision to call a snap election and then losing it.
He said: "Markets are not remotely pricing in how high the probability is for a Corbyn, socialist government to come into power during the course of the next few years or even months."
For him, the "big reveal" from the snap election, which took place in June and resulted in a hung parliament after the Conservative party lost its majority, was the massive demographic divide which the UK now faces stronger than ever.
"Capitalism is not working for those under 40," he added. "People are coming out of college with loads of debt, forced to work zero contract hours and have not got a cat in hell's chance of getting on the property ladder.
"Unless the government really addresses this, which they are not doing because their bandwidth is entirely taken up with Brexit, they will be sleepwalking into electoral disaster."
Buxton also criticised Hammond's offerings in his Autumn Budget which took place last month, stating his efforts were merely "token".
He said: "The government should be embarking on a massive nationwide housebuilding project but they are seemingly failing to do that."
Commenting on the UK economy more generally however, the manager said he expects a 2.5% increase in GDP growth for next year at best.
"Despite being nervous that asset prices are elevated and valuations are full if the world is continuing to grow there is no reason for profits not to grind upwards and for 2018 to be just as good as 2017," he continued.
"The UK slowed throughout the first half of the year courtesy of the impact of the sterling collapse and that induced a pick-up in inflation. Though current survey data suggests that is ongoing, we think inflation is peaking round about now and will fall away during the course of next year."
However, the manager remains cautious about the US, particularly with regards to the risk of wage inflation.
He added: "The Phillips curve is not dead but the elastic is unbelievably stretched so we will see a pickup in wage inflation at some point. If it is gradual then that is fine but if it is sharp then there is the risk for bond yields to spike, which would lead to the Federal Reserve raising rates and a negative impact on equity markets."
The manager also pointed out there is a skew in markets between growth and value and it is looking stretched on a global scale. He also believes as the Fed continues to raise rates, there will be "some reversion to value outperforming over 2018".
Helped by pension freedoms
Completed merger in August
'Very volatile commodity'
£25bn single strategy business
Strategic partnership with Ventre and Zagame