In the recent June 2017 general elections the Labour Party secured 262 seats depriving the Conservatives of the majority which secured a respectable 318 seats with a mere loss 23 seats which would have won them the majority. This resulted in the current coalition with the DUP (Democratic Unionists Party) which secured them the majority which cost the Conservative party a staggering £1.5 billion.
Since the election Labour leader Jeremy Corbyn has been been actively campaigning as there is speculation of approaching re-election as a result of the slow progression on the development of Brexit in regards to trade deals and economic changes which come with Brexit. However, some politicians feel that a labour government may run the pound driving the country into economic turmoil. Previous Labour governments have been known to decrease the value of the pound as a result of their overly socialist attitude to governing a country. Even though traditionally it has occurred when a Labour government was in power, is has also taken place when the Conservatives were in power this was otherwise known as Black Wednesday. In September 1992 the falling value of sterling forced the then Conservative government to pull out of the European Exchange Rate Mechanism after its attempts to support the currency failed.
Corbyn and his shadowing minister McDonnell have confirmed that they have a plan to tackle all possible scenarios if they were to occur such as running the pound. Mr Corbyn claimed there had “effectively” been a run on the pound since the Leave vote in the 2016 Brexit referendum, a result which led to a sharp drop in the value of sterling the next day – the pound has remained more than 10% below its pre-referendum levels.
Labour’s last election manifesto contained pledges to bring rail and water companies and Royal Mail back into public ownership as well as a number of other large spending commitments – to be funded by borrowing and higher taxes on business and the better-off.
Speaking on Monday, Mr McDonnell said a future Labour administration would not be “traditional” and “people want to know we’re ready, and they want to know we’ve got a response to anything that could happen”.
Labour, he argued, must “scenario-plan” for all kinds of potential challenges it might face in government “bringing the relevant experts together at every level to talk through what happens if there is such and such a reaction”.