Goldman Sachs Is Coming for Tea and Cookies With U.K.'s Labour
The Bank of England sits in London, U.K. (Photographer: Simon Dawson/Bloomberg)

Goldman Sachs Is Coming for Tea and Cookies With U.K.'s Labour

(Bloomberg) -- U.K. Shadow Chancellor John McDonnell is preparing to meet Goldman Sachs Group Inc. in a further sign that companies are starting to take seriously the possibility of a Labour government.

The New York-based bank approached McDonnell to ask if he would be willing to meet with Richard Gnodde, chief executive officer of its overseas operations, McDonnell told Bloomberg after a television interview in London Monday.

“I said of course I would,” he said. “We’ll make him a cup of tea and throw in some rich teas as well.” Sebastian Howell, a spokesman for Goldman Sachs in London, declined to comment.

McDonnell’s self-styled “tea offensive” to win over businesses to his hard-left agenda has gathered momentum as Prime Minister Theresa May struggles to recover her authority following the botched general election in June and tumultuous Brexit negotiations ever since.

He argues that banks and businesses, previously fearful of his views -- which include drawing on Karl Marx’s Das Kapital for inspiration -- usually leave their meetings “feeling reassured.”

Brexit Policy

Part of Labour’s attempt to build a relationship with business centers around its Brexit policy, which McDonnell describes as leaving nothing off the table. He said Labour would consider keeping Britain in a reformed single market that addressed voter concerns over freedom of movement in particular.

Any deal with the EU would need to overcome “some of the elements that motivated people to vote for Brexit,” he told Bloomberg Television in an interview to be broadcast later on Monday. “Those issues are going to be addressed anyway. Things are moving.”

Goldman CEO Lloyd Blankfein has been a strong critic of Britain quitting the EU, tweeting that many corporate executives would like to see a second vote on the decision. The bank is creating a Frankfurt-based holding company to prepare for Brexit, people familiar with the matter said in November.

But the bank also appears to have strong reservations about Labour, whose policies include increasing taxes on the highest earners and nationalizing swathes of the public sector including utilities and the rail network. Goldman partner Bobby Vedral was reported as saying last month that Britain under Labour leader Jeremy Corbyn would be like “Cuba without the sunshine.”

‘Relatively Minor’

McDonnell hit back at the suggestion that a Labour government would bring renewed pressure on the pound, rejecting the idea he’d consider imposing capital controls. Even his proposed income-tax increases for the top 5 percent of earners would be “relatively minor.”

“There will be a strong pound under us,” he told Bloomberg. “I’m not working on the base there will be a run on the pound, quite the reverse.”

McDonnell was speaking after announcing the party is debating moving some of the Bank of England’s operations to Birmingham. The plans are aimed at spreading investment across the country. They’re based on an analysis by the economist Graham Turner of GFC Economics, who found that Britain’s financial system is failing to deliver the investment needed in its high-technology sector.

McDonnell said a separate report will be published in the next few months that will look at which parts of he central bank would be moved under a Labour government.

“We want to try and locate institutions outside of London,” he said. “There is a dominance of London and the southeast in decision making.”

©2017 Bloomberg L.P.

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