Jeremy Corbyn and John McDonnell are way out of their depth and it’s downhill all the way for our economy if Labour leader reaches No10
REMEMBER 1976? The Bay City Rollers, that seemingly endless summer and Southampton beating Manchester United in the FA Cup?
I was just a kid but can recall all that and more. For I also vividly recollect 1976 news bulletins telling of “bankrupt Britain”, a “sterling crisis” and Jim Callaghan’s Labour government going “cap in hand” to the International Monetary Fund.
Forty-plus years on and today’s Labour leadership is speculating about another “run on the Pound” should they win office.
We have to be ready “if they come for us”, Shadow Chancellor John McDonnell told the party faithful in Brighton, almost inviting financial markets to cause havoc at the prospect of Jeremy Corbyn taking power.
Labour’s neo-Marxist leadership is playing with fire by messing with forces it barely understands.
McDonnell’s words are extremely dangerous and almost wilfully provocative.
If he isn’t careful, an economic apo-Cor-lypse will become a self-fulfilling prophecy.
The Pound has fallen around ten per cent since the Brexit referendum last year.
Lower sterling has, for the most part, helped the economy by boosting exports. That is why manufacturing output recently grew at its fastest pace since 1995.
But a serious and very sudden 1976-style currency plunge, reflecting a loss of confidence in the Government’s ability to take grown-up decisions and even remotely control the public finances, would be catastrophic.
Inflation would spike and, to defend sterling, the Bank of England would be forced to hike interest rates.
Corbyn and McDonnell are political chancers, two men way out of their depth who never expected to get this near high office
Liam Halligan
Houses would become even more unaffordable as mortgage costs spiralled along with car loans and other forms of consumer credit.
As interest rates rocketed, even a Labour government would have to yank up taxes and make drastic cuts to regain the trust of international lenders — as happened in 1976.
Back then, the IMF threw Britain a lifeline, issuing what was then the US-based institution’s biggest ever loan.
Britain would again suffer the shame of a Greek-style international bailout. All of us would be hit hard.
Corbyn and McDonnell are political chancers, two men way out of their depth who never expected to get this near high office.
Their breezy chat about a run on the Pound is so dangerous though because the Tories have failed to get our public finances under control.
Since the 2008 financial crisis, for all the “austerity” rhetoric, Britain’s national debt has exploded from 27 per cent to almost 90 per cent of national income.
We’ve run a budget deficit — spending more over 12 months than we raise in tax — in each of the past 15 years.
Yes, the deficit is down from the dark days after the Lehman bank collapse. But back in 2010 the Tories said they would balance the books by 2015. Then it was 2020.
Now, multi-billion-pound annual deficits will continue until “the middle of the next decade”, we’re told.
And far from getting smaller, the deficit is getting bigger again — which is what alarms the international investors we rely on to bankroll the Government.
Since April, borrowing by ministers is ten per cent up on the same period last year. If you think more borrowing makes sense, consider that the Treasury spent a massive £21billion in debt interest during the first four months of this financial year.
This is money down the drain which otherwise would have funded schools, hospitals and other frontline services.
Already, more taxpayers’ cash goes on debt interest than on defence and on state schools. Continued Government profligacy and waste means our debt interest bill is equal to no less than a third of what we spend on the NHS.
Under Labour, public spending would be even more wayward and irresponsible. Corbyn and McDonnell seem keen to remind us of their dazzling plans for expenditure, almost daring the markets to spark a crisis that would topple the Tories.
Is Corbyn really “ready for government” as he claims, bearing in mind he is determined to cause chaos even before taking office?
Could the bearded dunce take over the delicate Article 50 negotiations — given that Labour’s Brexit policy, which changes weekly, is to say whatever it needs to say to sow confusion across Parliament and beyond?
The long, hot summer of 1976 was soon replaced by the strikes and stagnation of The Winter of Discontent.
If Corbyn prevails, we’ll see history repeated.
- Liam Halligan is co-author of Clean Brexit – How To Make A Success Of Leaving The EU, published by Biteback, £20.