Morgan Stanley Is Right to Fear Labour, Corbyn SaysBy
U.K. opposition leader says the financial system is rigged
Attack follows bank warning over threat of Labour election win
Jeremy Corbyn, leader of the U.K.’s opposition Labour Party, lashed out at Morgan Stanley on Thursday after the bank warned of the risk to investors of him winning power.
Graham Secker, an equity strategist at the bank, said Monday that the possibility of a Labour government should concern equity investors more than Britain’s departure from the European Union, scheduled for March 2019.
“When they say we’re a threat, they’re right. We’re a threat to a damaging and failing system that’s rigged for the few,” Corbyn said in a video message released on social media. “These are the same speculators and gamblers who crashed our economy in 2008 and then we had to bail them out. Their greed plunged the world into crisis and we’re still paying the price.”
Corbyn has pledged to renationalize Britain’s railways as well as water and energy companies to reverse the privatizations started under Conservative Prime Minister Margaret Thatcher. Secker warned that the implications of a Labour government could be significant, particularly for companies in the utilities, postal services, telecommunications, financials and defense sectors.
“If I am a U.K. equities fund manager, I am more concerned about a potential change in the domestic political government than I am about Brexit,” Secker said at a briefing Monday. “You need to think about tax rates going up, about nationalization, about an economic system which has favored capital over labor for last 10 to 20 years shifting to favor labor over capital.”
Corbyn, whose populist campaigning and raft of redistributive socialist policies erased Prime Minister Theresa May’s majority in the June general election, used his message to stoke the sense of grievance among people struggling to get by while bankers pay themselves big salaries.
The Labour leader accused May’s Conservatives of allowing Morgan Stanley to become too close to policymakers and said Chancellor of the Exchequer Philip Hammond has met with its executives four times in the last year. People with links to the bank have also given large donations to the Conservatives, he said.
“The Tories used the aftermath of the financial crisis to push through unnecessary and deeply damaging austerity. That’s meant a crisis in our public services, falling wages and the longest decline in living standards for over 60 years,” Corbyn said. “Nurses, teachers, shopworkers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself 21.5 million pounds ($29 million) last year and U.K. banks paid out 15 billion pounds in bonuses.”
While the next election isn’t scheduled until 2022, speculation that Tory infighting could cause the collapse of May’s government and trigger an early vote has seen business leaders courting Labour as a potential government-in-waiting.
A Labour official said last month that approaches from business leaders or their lobbyists have soared since June’s election, in which Corbyn unexpectedly delivered his party’s best showing since Tony Blair in 2001. The new focus reflects concern among executives that Tory divisions over Brexit and May’s electoral failure put her government on borrowed time.
Even economy spokesman John McDonnell, who was criticized by some in his own party for saying “there was a lot to learn” from Karl Marx’s “Das Kapital,” is being courted by big business. Some lobbyists say access to McDonnell has become the top demand from their clients.
BlueBay Asset Management LLP, which manages $57 billion of assets and is among investors that are speaking to the opposition party, was scheduled to meet McDonnell this week.
“It’s not a surprise there is a swing toward redistributionist policy” because living standards in the U.K. have fallen, Mark Bathgate, a portfolio manager at BlueBay said last week. “Whether it’s good or bad is not for us to decide. We’re making sure we engage with a prospective government.”