Labour’s plans to renationalise rail companies, Royal Mail, water and energy utilities will cost £196bn up front, Britain’s foremost business lobbying group has claimed.

The Confederation of British Industry (CBI) said the initial cost of renationalisation would be the equivalent of spending all the money the government recoups from income tax in a year.

But Labour described the research as “incoherent scaremongering” that does not take into account the revenue that the newly nationalised industries would generate for the government.

The party has also maintained that renationalisation would be cost neutral in accounting terms as the government would exchange liabilities in the form of bonds for ownership of companies. 

However, the CBI claimed the up front cost would be close to the combined total of the £141bn health budget, and the £61bn spent on education.

It also claimed there could be a 10.7% increase in debt from bringing industries into public ownership.

This would raise debt levels to 94% of GDP, their highest point since the 1960s, and would cost around £2bn per year, according to the study.

The study claimed that savers and pensioners could also suffer an estimated £9bn loss to their holdings. 

Rain Newton-Smith, CBI chief economist, said: “The price tag for Labour’s renationalisation plans is beyond eye-watering – close to £200bn. And that’s only the starting point. It doesn’t take into account the maintenance and development of the infrastructure, the trickle down hit to pension pots and savings accounts, or the impact on the country’s public finances.

“There are so many other genuine priorities for public spending right now, from investing in our young people to the transition to low carbon economy and connecting our cities and communities. These issues are what keep businesses up at night and what they want to see the government get on with addressing.

“Firms want politicians to invest in major infrastructure projects rather than undermine confidence in our economy and waste time, energy and public money in a renationalisation project with no clear benefits.

“Investment in skills, infrastructure and innovation is how we will enable firms to grow, create jobs, and raise living standards in communities across the country – not by returning to failed, ideological economics that would make millions of people poorer in their old age.”

The report said confidence of international investors in the UK would be “severely hit” if Labour refused to pay full market value for the industries.

So it calculated its cost of renationalisation by using the value of the asset base of the water and energy sectors and multiplying it by a 30% mark-up “based on historical takeovers and market to asset ratios of publicly listed companies”.

For rail rolling stock, the CBI calculated the value using the asset base from the leasing companies’ annual accounts, extrapolating this based on the market shares and then applying a mark-up of 30%.

Labour is understood to strongly dispute the methodology behind the analysis, including the 30% mark-up and the claims about people’s pensions being hit.

A Labour party spokesperson said: “This is incoherent scaremongering from the CBI, which is bizarrely attacking Labour for compensating shareholders both too much and too little. 

“It is disappointing that the CBI seems incapable of having a grown up conversation about public ownership – which is hugely popular, and common across Europe. 

“It sadly reveals that they are more interested in protecting shareholders than in creating a fair economy.”

The CBI said its analysis covered renationalisation for nine regional water and sewerage regional monopolies, and the seven water-only companies in England.

It also included the National Grid, the electricity transmission networks, the distribution network, operators and gas distribution networks in England, Scotland and Wales, as well as the rail rolling stock and Royal Mail.