Brexit was bad enough, now John McDonnell has given businesses even more to think about. ANGELA JAMESON reports
Which is the bigger economic crisis facing the UK – the prospect of leaving the EU without any trade deal or a Labour government with Jeremy Corbyn as Prime Minister and war-gaming John McDonnell as his renationalising Chancellor?
The Labour Party is not prepared to debate Brexit at its conference, but the shadow chancellor is planning for a potential run on the pound if it wins the next general election.
No matter the damage that has already been done to the UK’s attractiveness to overseas investors, the Opposition is planning to make things worse.
The shadow chancellor’s pledge to take the water and energy sectors, and Royal Mail, back into public ownership might appeal to some voters but will scare off international investors at a time when the UK’s economy needs all the help it can get.
A report from the Belgian University of Leuven said this week that a Hard Brexit would cost as many as 526,830 British jobs.
The compulsion to not just talk tough with business but also to act tough was seen in London last week with Transport for London’s decision to strip Uber of its licence to operate, fully backed by Labour mayor Sadiq Khan.
It was a worrying sign of things to come and may lead to a ratcheting-up of anti-business moves within Labour’s leadership, as they inevitably jostle for positions of influence.
Some of the reasons that global companies have said that they will continue to invest and create jobs in the UK, despite Brexit, is because of the UK’s reputation as a good place to do business.
Around the world it is seen as somewhere with respect for property and the rule of law, and a stable fiscal environment that means that companies broadly know what they are facing, which gives them confidence to invest money.
That reputation is being ripped to shreds. First came David Cameron’s unnecessary Brexit referendum, then Theresa May dallying with ideas like price caps on energy bills – originally a Labour idea.
Anti-business policies are not unique to Labour, but Labour has this week shown that even in the face of a massive threat to the economy like Brexit, it will wage war against the companies that employ people, pay corporation tax, provide income for our pension funds and so much more.
It’s easy to dismiss conference speeches as hot air – especially since McDonnell’s was an uncosted speech about actions that would be illegal, without compensation – however the companies under threat cannot be so complacent.
They will not go on the record to respond to Labour’s provocations but their leaders now have a responsibility to begin war-gaming a Labour victory.
Not only would renationalisation and bringing back PFI contracts into the public sector be prohibitively expensive, it could lead to job losses on a huge scale, diminished savings for pensioners and, ultimately, less money to spend on the NHS and the poorest in our society.
UK business and economic activity was already disappointing in August, with construction and services missing expectations. Without a turnaround in the coming months, the UK could record another quota of negligible 0.3% GDP growth, while the annual figure would struggle to top 1%.
With real wages falling, consumer credit rising and bank deposits falling to their lowest level since 2009, consumers are not well placed for a downturn. The Opposition’s rhetoric at this point is far from reassuring.
Not a week goes by without mention of the Brexit bus and Boris Johnson’s pledge to find an extra £350m a week for the NHS. Well the claim might have run out of gas long ago, but the bus is still on its travels.
In a nice irony, a London-based financial technology startup has leased the very bus and is using it to promote its European expansion. Monese, an app that allows people to sign up for current accounts on their phone, says users of its service would be allowed to transfer up to 350m euros between UK and European accounts for no fee.
The slogan on the bus, which will be heading for Paris from London, now reads ‘Send 350m euros with zero fees’.
Faced with gloomy scenarios on many fronts, businesses keep battling on. A sense of humour helps.