“For Labour it’s the glad confident morning of 1945 all over again,” says Ben Chu in The Independent. “Rail, water, energy, Royal Mail – we’re taking them back,” John McDonnell told the Labour conference on Monday to rapturous applause. And the party is also pledging to bring private finance initiative (PFI) contracts back “in-house”.
This vision constitutes “the closest thing to a command economy” we’ve ever had in peacetime, says The Times. While he was at it, why didn’t McDonnell add catering and hospitality to “his list of vital industries”? After all, British Rail provided “famously inevitable sandwiches” and ran a hotel business. As far as the PFI contracts are concerned, there’s no doubt that some are unsatisfactory, but “the proper point of comparison for PFI is not with an ideal but with the practicalities of state procurement, which is not generally a model of efficiency” – a lesson many of Jeremy Corbyn’s young fans hopefully won’t have to learn the hard way.
The CBI and the British Chambers of Commerce were quick to rush out statements denouncing McDonnell’s plans for “forced nationalisation”, but the shadow chancellor reckons he’s one step ahead. McDonnell has revealed that Labour is making plans for how to deal with a “run on the pound” if “they come for us” following a Labour election victory, says George Eaton in The New Statesman. And McDonnell’s talk of “war-game type scenario planning” is not an overreaction. Not since François Mitterrand took the French presidency in 1981 has a European party come this close to power with such a radical policy programme. Mitterrand’s purist socialist experiment was “brought to heel” by the markets when the franc slumped, creating a surge in inflation and a policy U-turn. McDonnell is keen for the Corbyn project to avoid a similar fate.
Would a plunging pound “represent a sinister move by speculators to undermine democracy? Not really,” says The Economist’s Buttonwood blog. Labour’s plans to increase corporation tax and leave utility investors and PFI contractors worse off through nationalisation will all make Britain a riskier place to invest. Fund managers “need to generate the highest returns; if a British government threatens to cut those returns, it simply becomes less attractive”. Still, nothing is certain in currency markets. The pound may not plunge under Corbyn because by the time Labour reaches office, the current government will have so mucked up the Brexit process that the pound will already have “taken a beating”.
Tories keep squabbling after May’s Florence speech
In her Brexit speech delivered in Florence last week, Theresa May embarked on a delicate balancing act: to unblock stalled Brexit negotiations without destroying her government’s unity ahead of the Conservative Party conference. The trouble was that to achieve her first aim, says Simon Nixon in The Wall Street Journal, she had to “abandon” many core elements of official Brexit policy – ie, that an agreement with the EU could be reached in two years, and that this could be done without paying “vast sums” to Brussels.
In the event, she asked for a two-year transition deal on Brussels’s terms, “effectively extending Britain’s EU membership” until 2021, say George Parker and Alex Barker in the Financial Times. She also acknowledged that Britain would have to accept EU rules during this period, and promised to pay €10bn a year to Brussels in 2019 and 2020. Donald Tusk, the European Council president, praised the “constructive and realistic” tone of her speech and welcomed the end of Britain’s “have cake and eat it” strategy. Senior sources in Brussels and EU capitals claim that May “took dictation” from the European Commission over the “divorce bill”, says Peter Foster in The Daily Telegraph.
As for party unity, within days reports surfaced of “fresh squabbling” between foreign secretary Boris Johnson and chancellor Philip Hammond over the length and nature of the transition period, says James Blitz in the Financial Times. And just wait until the cabinet gets down to the nitty-gritty of “what the long-term trading relationship between the UK and the EU should look like”.