LONDON (Reuters) - The opposition Labour Party’s proposal for a sharp increase in state-funded investment is a high-risk economic strategy, Labour’s education policy chief said in an interview published on Thursday.
The socialist leadership of Britain’s second largest party has promised a range of sweeping economic reforms if it wrestles power from Prime Minister Theresa May’s Conservatives, including a debt-funded 250 billion pound 10-year investment plan.
“We are in different times, radical times where we need to have a real investment in Britain’s future. Genuinely. I don’t mean that as a slogan, I mean it as an economic strategy,” Angela Rayner, Labour’s would-be education minister told the Spectator magazine.
“It’s a high-risk strategy. But all of Britain’s great advancements in the past have been because we’ve had the gumption to take a risk.”
Labour performed much better than expected in a June national election, depriving May of an outright majority in parliament. That has pushed investors to seriously consider the prospect of Labour taking power sooner than the next scheduled election in 2022.
Morgan Stanley cautioned investors on Nov. 26 that political uncertainty in Britain was a bigger threat than Brexit given the risk of Corbyn winning power and then dismantling what was once seen as one of the world’s most stable free-market economies.
Labour leader Jeremy Corbyn later hit back at the bank, saying: “They’re right: We’re a threat to a damaging and failed system that is rigged for the few.”
Asked about Rayner’s remarks, a Labour Party spokeswoman said: “Angela was saying that we have a once in a generation opportunity, with historically low interest rates, to invest in our infrastructure, new technologies and our people, underpinned by our Fiscal Credibility Rule - and that we must take it.”
Labour’s proposed Fiscal Credibility Rule is designed to ensure it only borrows to invest in capital projects which will, over time, pay for themselves.
Reporting by William James; editing by Stephen Addison