Jeremy Corbyn has told Morgan Stanley it is right to regard him as a threat, after the investment bank warned its clients that a Labour government could pose as much of a risk to British business as Brexit.
The Labour leader hit back on Thursday, accusing Morgan Stanley of being part of the same “speculators and gamblers who crashed our economy in 2008”. In a video posted on social media, he also promised a new approach to financial services regulation.
“Nurses, teachers, shopworkers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself £21.5m last year and UK banks paid out £15bn in bonuses,” Corbyn said.
“Labour is a growing movement of well over half a million members and a government-in-waiting that will work for the many. So when they say we’re a threat, they’re right. We’re a threat to a damaging and failed system that’s rigged for the few.”
Corbyn said the greed of bankers had plunged the world into crisis a decade ago and the UK was still paying the price because the Conservative party had “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,” he said.
He highlighted Morgan Stanley’s $3.2bn settlement with US authorities for its role in the creation of flawed mortgage-backed bonds during the global financial crisis, and the bank’s four meetings with senior government figures including Philip Hammond, the chancellor, last year.
Corbyn said Labour would soon be publishing policies on the finance sector and how it planned to transform the economy.
He was moved to record the video, posted on his Twitter feed and Facebook page, after Morgan Stanley released a note telling investors about what it perceived as the risks of Corbyn taking power.
It comes after he was pictured on the front page of GQ wearing a Marks & Spencer jacket and red tie, having given an interview for the magazine’s latest issue, which contains its annual list of the 50 best-dressed men in the UK.
Morgan Stanley warned about the nationalisation of key industries, higher taxes and a shift in spending priorities towards low-income households under Corbyn’s leadership, which it said could damage valuations of UK companies.
It told investors that another general election was likely towards the end of 2018 once Theresa May’s government realised it could not secure the Brexit deal it wants and the Tories began to fall apart, opening the door to Labour taking power.
“The UK is in the midst of a double whammy of uncertainty in the shape of Brexit and a fragile domestic political situation. Taken together, these two factors – which are interrelated to some degree – cast a long shadow over the policy backdrop and economic outlook of the UK,” the report from Morgan Stanley’s European equity team said.
“For the UK market, domestic politics may be perceived as a bigger risk than Brexit. From a UK investor perspective, we believe that the domestic political situation is at least as significant as Brexit, given the fragile state of the current government and the perceived risks of an incoming Labour administration that could potentially embark on a radical change in policy direction.
“Against this backdrop, even if we see good progress in the Brexit negotiations, the scope for UK sensitive assets to rally may be muted unless we also see an improvement in the government’s position in opinion polls.”
Morgan Stanley said British utility companies, especially in the water and power sectors, were most at risk from a Labour government, but postal services, telecommunications and travel companies could also be affected.
Higher taxes and a corporation tax rise to 26% might damage British financial services, Morgan Stanley said.
“Spending priorities … shift in favour of low-income households and the public sector and away from outsourcers and defence companies,” the report continued. “Higher low-end wage growth could also impact service-oriented companies with low margins, such as retailers.”
guardian.co.uk © Guardian News and Media Limited 2010