Protecting jobs not paying off debt should be government's priority - Labour

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Anneliese Dodds says Labour wants "partnership" with business

The government should focus on keeping people in work rather than cutting borrowing and paying back debt, Labour's shadow chancellor has said.

Anneliese Dodds said raising taxes to cover debt repayments should be "some way off", thanks to low interest rates.

The UK is forecast to break peacetime records for borrowing as it tries to deal with the impact of coronavirus.

Chancellor Rishi Sunak has yet to set out how the government plans to repay the country's debts.

He did introduce a public sector pay freeze and changes that are likely to lead to an increase in council tax bills in last week's Spending Review.

The UK is forecast to borrow a total of £394bn this year, equivalent to 19% of national income, and underlying debt -one of the key measures or economic performance - is forecast to rise to 97.5% of national income by 2025/26.

'Hard ball'

Mr Sunak has said the country must wait for his Budget next year, when there would be "more certainty about the economic outlook" for any decisions on taxes, but being on a path towards record borrowing and debt was "not a sustainable position".

Asked when she thought debt repayments should start, Ms Dodds said: "That is some way off right now. We really do need to be stemming the tide of unemployment and business failures that we've seen right now."

She said the record level of borrowing would only become a problem "if our creditors started wanting to play hard ball or if we were in a situation where we had higher interest rates".

In an interview with Bloomberg, Ms Dodds said many companies wanted a "reset" in their relationship with Labour.

And she vowed to step up the party's "outreach" efforts to business.

'Blazing a trail'

Her predecessor as shadow chancellor, John McDonnell, also made efforts to build bridges with the City and combat what some saw as the party's anti-business stance under leader Jeremy Corbyn.

Ms Dodds called for a "genuine partnership" between Labour and the financial services industry, in a speech at Bloomberg's offices in London.

She praised the sector for "blazing a trail" for a green economic recovery and aiding businesses and homeowners but said they needed to go "further, faster" to boost jobs and spread opportunity around the UK.

"A well-functioning, responsible banking sector can help people save and build their financial resilience," she added.

She criticised the government for creating uncertainty around the end of the Brexit transition period, but refused to be drawn on whether Labour would support a post-Brexit trade deal in any Commons vote.

She said the party was anxious to prevent a "no deal" exit from the EU customs union and single market in 29 days time, but any deal that emerged from the talks must protect jobs.

It follows reports that Labour leader Sir Keir Starmer - who campaigned for another EU referendum - was planning to back Boris Johnson if he puts a trade deal to a vote in the Commons. Talks between the UK and EU on a deal are in their final stages.