Jeremy Corbyn's plans would 'turn City into the last Soviet-era capital west of Pyongyang'

Jeremy Corbyn was today warned that he would make Britons poorer as he revealed plans to clip the wings of the UK’s wealth-creating finance companies.

The Labour leader vowed to turn the City into a “servant” of what he called “the real economy” and attacked the sector for “out-of-control financial wizardry and gambling”.

The City’s supporters pointed out that it underpinned 2.2 million jobs and brought in £72 billion for the Chancellor to spend on public services such as the NHS, and said its success would be vital to keep the UK prosperous after it leaves the European Union.

The veteran City commentator David Buik said Mr Corbyn appeared to want to “turn London into the last Soviet-era capital west of Pyongyang”.

He added: “To go crashing into the City of London at a time of Brexit, which is proving a very difficult process, is close to insanity.”

The Institute of Directors said it would be a massive mistake to treat bankers as “bogeymen” when they were vital for the economy.

In his speech to the EEF manufacturers’ organisation tonight, Mr Corbyn is expected to say: “There can be no rebalancing of our distorted, sluggish and unequal economy without taking on the power of finance. For 40 years, deregulated finance has progressively become more powerful. Its dominance over industry, obvious and destructive; its control of politics, pernicious and undemocratic.

“The size and power of finance created a generation of politicians who thought the City of London could power the whole economy. Out-of-control financial wizardry and gambling were left barely regulated, while the real economies in once-strong industrial areas were put into managed decline.

“The next Labour government will be the first in 40 years to stand up for the real economy. We will take decisive action to make finance the servant of industry, not the masters of us all.”

Michael Spencer, founder and chief executive of NEX Group, said: “The City is Britain’s biggest contributor to taxation and one of the country’s largest employers. We should be proud of its achievements and look for ways to promote and support it, rather than tear it to pieces, otherwise everyone in the country will end up the poorer.”

David Lutton, director of economic policy at London First, said the financial sector was “at the heart” of meeting the challenge of securing jobs and growth after Brexit.

Danny Corrigan, who sits on the board of City standards body the Chartered Institute for Securities and Investment, said Mr Corbyn was focusing on areas of the City that had been a failure in the past.

“If Corbyn was ever right, he was right in 2008 but he’s way wrong now,” he said. Miles Celic, of lobbying group TheCityUK, hailed the City as a “strategic asset” that underpinned jobs, two thirds of them outside London. He said the industry contributed almost 11 per cent of UK’s total economic output.

Mr Corbyn will also promise a “public interest test” against hostile takeovers. He is currently embroiled in a row over his past links to a former communist spy.

Jan Sarkocy allegedly told his superiors in the Czech secret police in 1986 that Mr Corbyn might be able to give “information on British intelligence services”.

Mr Corbyn has dismissed the claims as a “ridiculous smear”, saying he had no privileged information, nor did he pass any on.

However, Theresa May upped the pressure yesterday by saying Mr Corbyn should be “open and transparent” about the alleged contacts. Czech officials say files show he was a “person of interest” but never a secret collaborator or an informer.