London’s vast financial services industry must never again be the “master of the economy”, the opposition Labour finance spokesman will say on Saturday in a speech accusing bankers of profiting from speculation at the expense of ordinary people.
John McDonnell, a veteran socialist who is now seeking to reassure business, promised higher taxes and tougher regulation on banks on the 10th anniversary of the collapse of Lehman Brothers – the pivotal moment in the global financial crisis.
In a speech outside the Bank of England, McDonnell will say ordinary people are still paying the price for the crisis through falling living standards and cuts to public services.
“One of the key lessons to be learnt from the crash is that never again must we allow finance to become the master of the economy, rather than its servant,” McDonnell will say, according to excerpts of his speech. “Labour in government will put finance to work for the real economy.”
With Prime Minister Theresa May’s government weakened by her Conservative Party’s infighting over Brexit, Labour is hoping her minority government will collapse. Most recent opinion polls show Labour level with the Conservatives, meaning they could form the next government, although the next election is not due until 2022.
Despite his previous antipathy towards bankers, McDonnell is trying to win the support of financial leaders just as former Labour leader Tony Blair helped prepare his party for power with what was dubbed the “prawn cocktail offensive” in the 1990s.
For example, McDonnell went for talks with the Wall Street bank Goldman Sachs earlier this week to discuss Britain’s upcoming departure from the European Union.
However, his speech will be clear that Labour will seek to extract more revenue from the City of London, including proposals to expand an existing tax on shares to trading on other assets such as bonds and derivatives. He will say the financial industry needs to do more to rebalance the economy towards manufacturing and technology industries rather than lending to invest in property.
“The crash also exposed how far the balance in the role of the City had been tipped away from securing long term investment in our economy towards short-term, high-stakes gambling,” he will say. “We will restore balance to the role of finance in our economy.”
Published in Daily Times, September 16th 2018.