One moderate, centre-left MP after another was deselected by constituency activists. Night after the night the TV news showed them making the slow walk from their front doors to the cameras at their gates, waiting for their confessions of failure.
In the run-up to the 2020 Election, Mark Carney, the Governor of the Bank of England, had issued warnings that no Government, of any party, could buck the markets. Printing money to fund otherwise unaffordable policies ‘had the same effects in every country that’s tried it, from Argentina to Zimbabwe’.
‘If you drastically increase the amount of money in the system, you drastically reduce its value. So you need more money to buy the same goods. That causes hyper-inflation. And with that comes disaster’.
Within days of becoming Prime Minister, Corbyn took his revenge. He stripped the Bank of its political independence, renamed it The People’s Bank and sacked Carney.
As he strode through Heathrow’s Terminal Five on the way to the plane returning him to his native Canada, Carney was confronted by a BBC reporter who asked: ‘How do respond to the Prime Minister’s comments that it’s the people, not the financial markets who control the UK economy?’
Carney gave a wry smile and said: ‘Well, I guess we’ll just have to see what the markets have to say about that.’
They soon spoke, loud and clear. The seizure of the Bank told Britain’s creditors that their money was no longer safe. The pound plummeted in value. There was a global sell-off of Treasury ‘gilts’, the Government bonds that finance the UK’s National Debt. The Government found that, instead of paying interest rates of less than two per cent, it was suddenly contending with Greek-style borrowing costs of ten per cent or more. Pundits spoke of a ‘Wonga economy’ as debt repayments alone became the Government’s single biggest expenditure.
Within weeks of the Election money was flooding out of Britain as the billionaires who had seen London as a safe haven realised that it had suddenly become a much more dangerous place.
The capital’s property prices started tumbling as the lavish mansions of Russian oligarchs, and the overpriced apartments bought off-plan by Far Eastern investors, deluged the market.
‘We will use these empty, unwanted homes for social housing,’ Corbyn said. That earned him plaudits with the public, who had yet to appreciate how the collapse of the London luxury property market would have an impact on the value of ordinary homes across the country. But the rest of the world was less impressed.
The IMF called for drastic cuts in Government spending. The Germans made it plain that Britain could not escape the medicine taken by other EU nations that had found themselves in crisis. London would have to take its orders from Berlin, just as Athens had done. Corbyn simply refused. In an emergency Budget, the new Chancellor of the Exchequer, Diane Abbott, revoked the tax exemptions given to foreign residents in the UK, announced a Capital Levy and Land Tax and raised the top rate of Income Tax to 95 per cent on incomes over a million pounds.
‘For too long,’ Corbyn said, ‘the poor have borne the brunt of the cuts. Now let’s have some austerity for the rich.’
Corbyn also attempted to reintroduce exchange controls, limiting the amount of money anyone could take out of the country. But in a world of instant electronic transfers, money was simply too mobile to be kept in any one place.
And now it really began to move. In a throwback to the 1970s – the last time the Labour Left tried to defy economic reality – the rich proved why sky-high tax rates raise rock-bottom revenues.
Faced with giving 95 per cent of their money to Chancellor Abbott, they simply left the country and paid nothing at all.