CBI chief says Labour’s renationalisation plans would be as damaging as hard Brexit

Posted On: 
13th March 2018

The head of the CBI has launched a blistering attack on Labour's plans to nationalise swathes of British industry, saying they would inflict as much damage to the economy as a hard Brexit. 

Jeremy Corbyn and John McDonnell advocate sweeping nationalistion of British industry
PA Images

Confederation of British Business president Paul Drechsler said that the UK was having to “navigate its way between two significant threats.

“On the one hand, there’s a real risk of a hard Brexit. On the other there’s a nationalising ideology.”

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He told a group of business leaders in London that the dual threat was leading to investors “reaching for their coats.”

“Now, some are saying: ‘don’t worry, it’s not going to happen. We’ll get a Brexit deal. And no one’s going to be taking private assets into state hands.’ That may be. I don’t make predictions. Not when it comes to politics. But the first lesson in business is, confidence is everything. And every day, I’m hearing of potential investors reaching for their coats.”

He added: “they’re not going to risk putting their money into an economy that soon might face export barriers to its single biggest market. Let alone invest in companies, assets and services that could soon be taken over by the state.”

Labour have pledged to renationalise water, rail, energy and postal services if they get into government, with shadow chancellor John McDonnell describing the measures as an “economic necessity”.

But the CBI chief defended private investment in utility companies and challenged Labour to provide evidence that their plans would result in a better deal for customers.

“So you want to nationalise energy, rail and water, and bring public services contracts back in-house? Let’s see the evidence that it will deliver a better service to consumers at a lower cost,” he said.

The comments will come as a blow to Labour after the business lobbying group had previously come out in support of the party's plans to keep the UK in “a” customs union the EU. 

“Now, there are things we can agree on with Labour. Including their backing of the CBI’s customs union proposal. But their policies aren’t driven on evidence. They’re driven on ideology,” Mr Drechsler continued.

“Almost every day I hear of investment being postponed or cancelled or jobs being moved overseas. And while we argue ideology, the world isn’t going to wait for us to catch up”.