Editorial Comment:

If Labour won the election, the City would be in real trouble. Labour wants to plug part of the massive black hole in its proposals by hitting the financial sector with a transaction tax – an idea that has been around for years and not got any saner with age. Such a levy in the UK would be a disaster, just as it has been whenever it has been tried elsewhere.

The hard-Left has rebranded it as a Robin Hood tax to give the impression that it steals from the rich to give to the poor, but it would actually hit everyone. Tax transactions and it will be investors, large and small, who pay the price in the form of lower returns; companies will find it much more expensive to raise capital and thus spend less; traders and banks will be forced to move vast swathes of their operations out of the UK. Employees in the City, which is estimated to account for over 400,000 jobs, would face the sack. As capital flees, so tax receipts would fall and the deficit grow. There was a time when even Labour understood this. Sadly, under Jeremy Corbyn they are utterly economically illiterate. It is important that the Tories remember to make the case for a lower-tax economy – because no one else will.

One of the very few organisations that would welcome Labour’s financial transaction tax is the EU, which above all hates the success of the City of London and would love to grab its business. Indeed, Labour’s lurch to the far-Left is another reason why pessimists in the City need to stop obsessing about the dangers to their industry from Brexit. The real threat to Britain’s economy does not come from it quitting a protectionist bloc and embracing global free trade. It comes from a revival of Neanderthal socialism at home.