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Socialist firebrands in UK prepared for a 'run on the pound' if elected

  • The U.K.'s Labour party has come under fire after its shadow finance minister said he was prepared for a run on the pound if the Labour party won the next general election.
  • In remarks made at a fringe event during the Labour Party's annual conference this week, Shadow Chancellor John McDonnell said he would plan for a "run on the pound" if the Labour party – the most left-wing its been for decades under socialist leader Jeremy Corbyn — get into power.
Jeremy Corbyn, MP for Islington North and candidate in the Labour Party leadership election, speaks to supporters outside Great St Mary's church on September 6, 2015 in Cambridge, England.
Rob Stothard | Getty Images News | Getty Images
Jeremy Corbyn, MP for Islington North and candidate in the Labour Party leadership election, speaks to supporters outside Great St Mary's church on September 6, 2015 in Cambridge, England.

The U.K.'s Labour party has come under fire after its shadow finance minister said he was prepared for a run on the pound if the Labour party won the next general election.

In remarks made at a fringe event during the Labour Party's annual conference this week, Shadow Chancellor John McDonnell said he would plan for a "run on the pound" if the Labour party – the most left-wing its been for decades under socialist leader Jeremy Corbyn — get into power.

"What if there is a run on the pound? What happens if there is this concept of capital flight? I don't think there will be but you never know, so we've got to scenario-plan for that," Labour's would-be finance minister McDonnell said at a conference event late Monday, according to a recording posted on the Guido Fawkes news website.

McDonnell, who like Corbyn is known for his far-left views on politics and the economy, is then heard in the recording adding that: "People want to know we are ready and they want to know we have got a response to anything that could happen. Because if we can demonstrate that... that will calm things down as well."

Although the next U.K. election is not scheduled until 2022, a vote could come sooner due to Prime Minister Theresa May's weak position in government following her poor performance in the general election in June.

Meanwhile Labour, which is the largest opposition party in the U.K., did well at the last election, gaining 36 seats in parliament (the majority being won from the ruling Conservative party), making it a potential winner if it can maintain momentum and increase in voter share.

The party is popular with young voters and those in cities, who like Corbyn and McDonnell's policies and promises to scrap tuition fees, renationalize utilities and railways and introduce higher tax for top earners, as well as ending austerity measures that have curbed public spending.

Despite its loyal fan base and backing from the U.K.'s trade unions, however, the party still has a long way to go to convince the larger part of the electorate that is wary that Labour is offering too much of a retrograde and too far-left vision for Britain.

For McDonnell to say that the party was planning for the eventuality of a run on the pound – a scenario that would see a mass selling of sterling on foreign currency markets due to investor fears that the currency (and economic standing of the U.K.) is going to lose value – reveals that he is well aware that financial markets would be spooked by a Labour win, worrying that it would lead the country into more borrowing to finance its pledges to end austerity.

Issuing a response to the remarks, Conservative Chancellor Phil Hammond said McDonnell had "privately conceded the disastrous effects that Labour's plans would have on Britain's economy – a collapse in business investment and a crash in the value of the pound, causing a shock wave of inflation," adding that "Labour's plans would go too far, and ordinary working people will end up footing the bill."

But Labour leader Corbyn, a long-time ally and colleague of McDonnell, told the BBC that he was "right to look at all these scenarios."

Corbyn himself is no stranger to controversy, having fought off criticism, internal leadership challenges and resignations of shadow ministers to remain as leader, a move seemingly vindicated by the party's good performance in June. On Wednesday, Corbyn is to give a speech in which he will say the party is ready for government.

In extracts of his speech released by the Labour party last night, Corbyn will state that the next Labour government "will be a different, giving power back to the people."

"Against all predictions, in June we won the largest increase in the Labour vote since 1945 and achieved Labour's best vote for a generation. It's a result which has put the Tories on notice and Labour on the threshold of power," Corbyn will say.

"Yes, we didn't do quite well enough and we remain in opposition for now. But we have become a government-in-waiting. And our message to the country could not be clearer: Labour is ready… We are ready for government."