UK economy unprepared for fourth industrial revolution – John McDonnell

John McDonnell speaks at a rally to mark the 10th anniversary of the collapse of Lehman Brothers and the financial crisis (Jonathan Brady/PA) Credit: PA Wire/PA Images

John McDonnell has claimed the financial crises has left Britain’s economy dangerously unprepared for the fourth industrial revolution.

Speaking ahead of a protest calling for reform of the financial sector outside the Royal Exchange building in London, the shadow chancellor said the revenue generated by the city is being squandered.

He told the Press Association: “I’m worried that the City of London isn’t listening and what we have is a system whereby the productive elements of the economy that are creating wealth is being diverted into property speculation and not addressing the real need and the fundamentals of our economy.

“We’re facing the fourth industrial revolution and we’ve got the lowest investment in robots in the G7, and we’re still not investing in the schools we need.

“We need to harness the resources of the finance sector in this country to make sure it’s invested in long-term, patient, stable investment, and I’m not seeing that happen.”

He said among his biggest concerns for Britain’s future were household debt and the fact that wages are still below the level they were in 2010.

However, Mr McDonnell said he welcomed the news that Mark Carney will be remaining in post until the end of January 2020.

He said: “I have a good working relationship with Mark Carney, I’m glad he’s remaining, it will give us the stability and it will enable us then when we go into a government we can work with a banker we have confidence in.”

He denied that calling for greater regulation sends the message that Labour wants to punish the city for the financial crisis, saying: “I think demonstrations like this are sending out the message that what we need is reform in the financial sector and that will provide us with the long-term stability that we need. Unless we address these issues, we are simply storing up problems for the future.”

Mr McDonnell said that the possibility of quitting the EU would be disastrous for the economy and that a Labour government’s number one priority would be securing a deal.

He said: “Consistently now, we’ve been meeting with business leaders, trade union leaders, representatives from the city, asset managers and bankers, I met with representatives from Goldman Sachs last week, all the messages are the same – ‘Get a deal that protects jobs and the economy’, and if they can’t, the message is ‘move aside. We’ll do the negotiations’.”

In his speech, he renewed Labour’s 2017 election pledge for a transaction tax between financial institutions and the establishment of strategic investment pot for banks and business leaders to work with government to generate wealth.

Protesters lead the calls for financial reform Credit: Jonathan Brady/PA

He added that Labour would crack down on legal tax avoidance, saying: “In the last general election people accused me of having a magic money tree.

“Well, I’ve found it – it’s in the Cayman Islands. We’re going to dig it up and bring it here.”

He continued: “[To banks] the message is this – you will get a decent rate of return but we are not going to be ripped off any more – ripped off by speculation, privatisation, job cuts and exploitation of workers.”

The event was organised by pressure group Change Finance and Positive Money, and among the speakers were Zita Holbourne, of civil rights group Barac UK, and Green MEP Molly Scott Cato.

Also among the speakers was SNP MP Kirsty Blackman, who boasted of her party’s reforms to welfare, taxation and social housing.

She said: “In Scotland, if you look at what’s happening, even with one arm behinds its back – because the Scottish Government doesn’t have all the power – you can see what a government on the left can actually do.”