The argument that markets will react badly to borrowing doesn’t wash – Rachel Reeves has to be open about using taxes
- John McDonnell was shadow chancellor from 2015 to 2020
Today, Rachel Reeves announced that she is delaying plans to borrow £28bn a year for a green prosperity fund under a Labour government. There may be some influential people in the Labour party who never supported the plan in the first place – maybe because it looked so much like the 2019 manifesto. And now, perhaps as a result, we’re seeing any excuse being used to undermine it.
The argument being put forward is that the bond markets will react to Labour’s borrowing in the same way they responded to Liz Truss’s fantasy budget. This would make the necessary borrowing too expensive to deal with, and anyway, it’s impractical to spend on that scale in the early years of a government.
John McDonnell has been the Labour MP for Hayes and Harlington since 1997. He was shadow chancellor from 2015 to 2020
