Labour could cause a run on the pound, warns Labour: Corbyn and McDonnell stage ‘war-game’ exercise

Jeremy Corbyn has insisted that shadow chancellor John McDonnell is right to “war-game” a run on the pound and a flight of capital as possible scenarios following the election of a Labour government.

Speaking at a fringe event at the party’s conference in Brighton, McDonnell said that while he didn’t consider a run on the pound likely “you never know and we have got to scenario plan for that”. Corbyn backed his shadow chancellor, saying yesterday “John is right to look at all these scenarios because if we’re going to move into government we need to know what we’re going to do, but also look at all the scenarios”.

The comments were seized upon by the Tories, with chancellor Philip Hammond saying that Labour’s economic policies would trigger “a collapse in business investment and a crash in the value of the pound, causing a shock wave of inflation”.

McDonnell, who has previously called for the overthrow of capitalism, said that his party would “hit the deck running” if elected and that officials were preparing “detailed implementation manuals”.

Earlier in the week, Labour reiterated its pledge to nationalise swathes of the utilities sector and bring private finance initiative (PFI) contracts “back in house”. McDonnell pledged to start consulting consumers, passengers and local authorities about how a Labour government would implement the controversial plans.

The shadow chancellor vowed that Labour would be “a radical government” and that the party was trying to “answer the question about what happens when, or if, they come for us”.

When asked yesterday who McDonnell meant by “they”, Corbyn replied: “I think they’re people who John probably doesn’t like,” adding: “I think he’s looking back again to the experience of past Labour governments” – a reference to the 1960s and 70s when financial markets reacted negatively to the policies of the Wilson governments.

The scenario planning is being carried out by the group Class Wargames, which describes itself as “an avant-garde movement of artists, activists and theoreticians engaged in the production of works of ludic subversion in the bureaucratic society of controlled consumption”. The group also “trains the militants of the cybernetic communist revolution to come”.