Business chief warns John McDonnell's nationalisation strategy will add to Brexit delays in investment

 
Helen Cahill
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Labour Party Conference 2017- Day Two
Source: Getty

A top lobby group has warned that John McDonnell's plans for the UK economy will exaggerate the problems businesses already face due to Brexit.

At the Labour party conference yesterday the shadow chancellor outlined his intention to nationalise sectors such as the railways, utilities and construction, and his policies have drawn sharp criticism from representatives of the business community attending the conference.

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Speaking to City A.M., Josh Hardie, deputy director-general of the Confederation of British Industry (CBI), said the shadow chancellor's tone on business issues was important, and that any plan to nationalise large parts of UK industry would stall investment decisions - decisions which are already being impacted by the Brexit negotiations.

He said:

We can't escape the feeling that that is going to have an impact on business investment...Everything you say has an impact.

Business lobby groups have made it clear that they are hoping to have a constructive dialogue with McDonnell and his team. As yet the shadow chancellor has not outlined the details of his strategy, and groups such as TheCityUK and the CBI see this as an opportunity for influencing his sweeping proposals.

Today, shadow City minister Jonathan Reynolds sought to sooth concerns over his party's stance, and said he had managed to weed out some proposals from the first draft of McDonnell's speech.

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He said McDonnell's position on nationalisation did not amount to "buying the Big Six" energy companies, and that the party would instead seek to introduce government-backed competitors in specific parts of the UK.

"On things like the railways, most people recognise that other countries have publicly owned railways," he said.

Wes Streeting, a Labour member of the Treasury select committee, told City A.M. that there was a case for nationalising the railways when companies come to the end of their franchise periods.

However, he added: "I think Labour hearing the voice of business is really important."

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