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Abu Dhabi, UAEWednesday 19 December 2018

Labour’s ‘Marxist’ shadow chancellor has consulted hedge fund

John McDonnell met with representatives of BlueBay Asset Management, who have bet against the British economy

John McDonnell has consulted with a hedge fund that has bet against the British economy. REUTERS/Darren Staples
John McDonnell has consulted with a hedge fund that has bet against the British economy. REUTERS/Darren Staples

Britain’s opposition Labour party, which has been pursuing an agenda that many are calling hard-left and which is being cited as a threat to the future prosperity of the nation, has been consulting with a hedge fund which has more than $57 billion in assets and which has positions that are actively working against the stability of the country’s economy.

The Bloomberg news agency is reporting that BlueBay Asset Management LLP is one of many groups of investors that are speaking to John McDonnell, the shadow chancellor and self-styled radical who would take over control of Britain’s economy should the Labour party be returned to power I the next general election.

“We’re not giving a political endorsement to a political party here, but as macro investors we actively engage in dialogue with policymakers across the spectrum,” Mark Dowding, a senior portfolio manager at the firm, told Bloomberg. “There are elements of what Labour stands for that we find interesting and there may be elements that we disagree with.”

He declined to comment on the meeting with McDonnell, and aides to the shadow chancellor, a key ally of Labour’s leader Jeremy Corbyn, also declined to comment.

While the world of finance has always maintained links with the Labour party when it has been in opposition, despite – as now – the party’s stated policies often being considerably far to the left of the centrist political consensus, the recent popularity of the Mr Corbyn’s party, culminating in denying a parliamentary majority to Theresa May’s Conservative party in June’s general election, has made some in the City and big business put feelers out to Labour.

Mr McDonnell has recently said the party is taking “advice and assistance” from asset managers to build an informal partnership with business leaders although he refused to name them so as not to “draw them into the politics” by naming them.

BlueBay, which is owned by Royal Bank of Canada, is based in London’s Mayfair district and has offices across Europe and the US. It manages money for institutional investors and invests mainly in fixed-income securities. Its funds are currently shorting the pound and UK government bonds – meaning they will gain from a sell-off which would indicate a serious lack of belief in the country’s economic prospects – according to BlueBay’s Dowding.

Mr Dowding warned in July that the UK economy was so weak that it may require a bailout from the International Monetary Fund, as it did in 1976, a view Mr McDonnell has been trying to row away from since admitting in September that a run on the pound could possibly take place under a Labour administration.

“John McDonnell has made clear, as Labour prepare for government, the shadow treasury team is happy to meet investors that have requested to meet with Labour,” the party said in a statement. “We are completely open with them about our economic policy.”