The key question Julia Hartley-Brewer (no friend of Labour) put to me was what could actually be done by John McDonnell to manage this situation? My response was simple. One of the major mechanisms I suggested that might be used to engineer an attack on sterling would be a large scale sale of government bonds (gilts). This would indicate a withdrawal from sterling, a lack of confidence in the government, a signal that the market would not lend what Labour wanted, and would (because interest rates are the inverse of price in the case of gilts) force interest rates up (which is the surest indicator of there being a run on the pound) by forcing prices down.
But, I said, any Labour government could now manage this. What it could say, even before it was elected, was that it would actively intervene in the bond markets by requiring that the Bank of England intervene to buy any amount of gilts that the market wished to dispose of in the event of its election using newly created money that would be put into use by the Bank of England for this specific purpose. As a result any seller would find a willing buyer, and the price would not go down after all. None of the signals the attack would be meant to deliver would arise in the market as a result. In that way any market storm could be ridden out, interest rates could be kept stable, the debt market would be kept in good ordering, there would be no pressure on base rates and within days the hysteria would have dissipated and the identity of the party really in control of the markets (the Labour government) would have been firmly etablished.
Spuds going to raise the price of something by increasing the supply of it.
He’s going to make pounds more expensive by making more pounds.