Investors have thrown their weight behind Labour in a blow to Rishi Sunak’s attempts to repair the Conservative Party’s reputation for sound money.
Two thirds of money managers and traders surveyed by Bloomberg said that either a Labour-led government or a Labour-led coalition would be the “most market-friendly outcome” at the next general election.
The majority cited the fallout from the mini-Budget bond market meltdown under Liz Truss as the reason for backing Sir Keir Starmer’s party, with 80pc of the 227 people surveyed saying confidence in British assets had not yet fully recovered.
It came as former Bank of England governor Mark Carney accused Ms Truss of turning Britain into “Argentina on the Channel”.
Speaking at the Global Progress Action Summit in Canada, he said: “When Brexiteers tried to create Singapore on the Thames, the Truss government instead delivered Argentina on the Channel – and that was a year ago.
“Those with little experience in the private sector – lifelong politicians masquerading as free marketeers – grossly under-value the importance of mission, of institutions, and of discipline to a strong economy.”
Argentina has become a byword for economic dysfunction after suffering a string of economic crises, including defaulting on its international debts nine times.
Mr Carney accused “extreme Conservatives” in Britain and abroad of using tax and spending cuts as a “Pavlovian reaction to every problem”, which was “grounded in a basic misunderstanding of what drives economies”.
The Canadian said: “Nothing, even far right populist politicians, can demolish our efforts more quickly than a fiscal crisis, and the market reaction to the Truss budget underscored the tough new macroeconomic environment.
“Sound money and credible policies will be rewarded, mistakes will be punished. No government will be exempt.”
Mr Carney, who left the Bank of England in 2020, was speaking at an event attended by Sir Keir, former Labour leader Sir Tony Blair, Canadian Prime Minister Justin Trudeau and former New Zealand Prime Minister Jacinda Ardern.
Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research (CEBR), said Mr Carney was “trying to exculpate” the Bank of England even though it had been too slow to raise interest rates and had “let the pension fund liability problem blow up, which they hadn’t disclosed to anyone”.
He said: “They’ve been trying to blame Liz Truss and Kwasi Kwarteng when actually they themselves contributed to the problem.”
Mr McWilliams said Mr Carney’s comments were “absolutely extraordinary” for a public servant.