Harvey Blackwood - Corbyn Defends Warning Over Sterling Rout
Harvey Blackwood: Leader of UK's Opposition says it is right to plan for run on the pound.
Shanghai, China, September 29, 2017 (Newswire.com) - The following analysis is from the perspective of Shanghai-based firm, Harvey Blackwood.
The Leader of Britain's Labour Party, Jeremy Corbyn has defended his Shadow Chancellor's assertions that there could be a run on the British Pound if the Party won the next general election. Speaking during a recorded TV interview, Mr. Corbyn stood by remarks made by John McDonnell regarding the fact that his party was conducting "war-game-type scenario planning" in the event there was a sharp fall in the value of the pound sterling.
The comments appeared to suggest that extensive capital flight and a concerted move by speculators to sink the currency could occur owing to fears over the Labour Party's standing policy of borrowing heavily to fund government spending if they were to come to power.
According to Shanghai, China-headquartered wealth management boutique, Harvey Blackwood, investors and savers may resort to converting their assets into currencies other than sterling fearing a collapse in the pound.
Extensive public sector borrowing is a central pillar of the Opposition's manifesto, a policy which Mr. Corbyn has dubbed "quantitative easing for the people". Economists fear that creating the £250bn a Labour government would need to achieve its objectives would devalue sterling and result in high inflation and a severe erosion of investor confidence.
A senior executive at Harvey Blackwood said that a Labour government that acted on its promises in this regard could very well see Britain default on its debt to creditors.
The pound has staged a mild recovery since plunging more than 20 percent immediately following the landmark EU Referendum on 23 June 2016 but it is still significantly weaker than before the vote. The country's rate of inflation has climbed to 2.9%, significantly above the Bank of England's official target with the cost of what Britain imports rising as the weakened currency buys less than it did.
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Source: Harvey Blackwood