Election '97: Thatcher's children wary of new broom

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The man in the orange jacket spoke with the kind of clarity voters have been crying out for, writes Steve Boggan.

"The markets are worried about Labour. They are already depressed at the prospect of Blair getting in and that has been reflected in prices over the past couple of months. If Labour win, we are all expecting a hike in interest rates. There is a lot of fear - the perception of Labour and all the old industries, its links with the unions and so on. The City does not want Labour to win."

As Steve Clark, a financial futures trader at the London International Financial Futures Exchange (Liffe), spoke, two colleagues nodded agreement. Yet, for all his fears about Labour's past, the Winter of Discontent and reminders of 98 per cent supertaxes under old Labour, Mr Clark is only 21.

It is people like him who have to be won over by Tony Blair. They are the backbone of a vibrant financial sector but their only experience is of Conservative rule - a period which has been particularly kind to them. Labour knows this, hence Mr Blair's keynote speech to business people at the Corn Exchange, followed by a tour of the trading floor of the BZW investment bank.

The speech was well received, mainly because most of those present were invited from a 15,000-strong database of entrepreneurs and executives already visited by Mr Blair or Gordon Brown, the shadow Chancellor.

Among the most eminent was Sir Peter Heap, adviser to the board of HSBC Investment Bank, who said business no longer feared Labour. "The market is unpredictable, but looking at the work of analysts, none is predicting any catastrophes or disasters. Quite the contrary, in fact."

Other Labour proponents included Lord Hollick, of United News and Media Plc, the film-maker Sir David Puttnam, and Lord Paul, of the Caparo Group. They ensured Mr Blair had a smooth ride, as he did at BZW.

But opposite the investment bank's entrance overlooking the Thames is moored the London Regalia floating restaurant and from this, in their garish blazers, other traders looked on, nonplussed.

They were not always well-informed, but they were consistent - the City was wary of Labour. "People are not convinced at all by their strategy for business," said Stuart Ward, 30, a gilts trader from Essex. "The general feeling is one of uncertainty. People believe that, secretly, they are still hand-in-hand with the unions."

His colleague, Tony Sellars, 33, from Kent, said: "I don't believe them on taxes; I don't think many people do. They keep saying 'we can be trusted', but I'm not so sure." Echoing the sentiments of other traders, Mr Sellars put into words the fear that must be visiting Labour strategists' worst nightmares: "What I always say," he offered, "is: better the Devil you know ..."