Goldman Sachs warns that a Labour victory on 7 May will be a disaster for British businesses

If Labour wins the 7 May general election, small businesses will come in for a hiding and investors will start selling shares, one of Britain's top investment banks has warned.

An "election special" briefing sent to clients on 21 April claimed that victory for Ed Miliband would be "more problematic by the business community" than a Tory return to Downing Street.

The party's crackdown on zero-hour contracts could hit the labour market, it said. Goldman Sachs also noted that potential market interventions, such as an energy bill price freeze, were viewed with "scepticism".

The bank was scathing of the ability of past Labour administrations to deal with financial challenges.

But, said Goldman Sachs, the Conservative-led coalition had established "some credibility in markets as a consequence of its contribution to the stabilisation of the economy and revival of growth that has been achieved since 2010".

The report said the Tories had a "more rapid and more precise" plan than Labour to balance the budget by 2018-19. A Tory government would best support market and business sentiment, sazid the report.