Gideon Bull stood down as the party’s candidate in Clacton following an accusation that he used the term “Shylock” to a cabinet colleague at the London local authority where he is a councillor.
But Mr Bull denied that the comment was directed at Jewish councillor Zena Brabazon, deputy leader of Haringey Council.
And he said he was not aware that the word was offensive or that Shylock – the money-lender villain of Shakespeare’s The Merchant of Venice and one of the most famous Jewish characters in English literature – was Jewish.
In a statement announcing his withdrawal from the race for the 12 December election, Mr Bull insisted it was “entirely false” to suggest that he directed the comment at Ms Brabazon.
He said: “I used an analogy when referring to a housing decision being called in by backbenchers. I was not referring to the councillor, who was not part of the call-in.
“When she politely informed me that this saying was offensive, I immediately apologised and explained that I did not know that Shylock was Jewish and I would never have mentioned Shylock if I had known this.”
Mr Bull added: “I grew up in a working class area in Ilford where this was a common saying, but I didn’t know it was offensive.
“This was a genuine accident and I reiterate my sincere apology for this mistake. I’ve decided that right now is not the best time for me to stand as a candidate.”
Mr Bull’s decision comes after another Labour candidate, Kate Ramsden, stood down as candidate in the Scottish constituency of Gordon over a blog post comparing Israel to an abused child which grows up to become an abusive adult.
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