Labour is fast becoming the new party of business – and Brexiteers have done all the hard work for them

There was a time when Corbyn’s allies would not sup with the devil in the City of London but McDonnell now shares a cup of tea there

Whenever a group of business people chew the fat, the chances are they will turn to the “what’s worse?” question – a Corbyn government or Brexit? Until recently, many feared the most left-wing government in British history more than Brexit. But now some are having second thoughts: the UK will leave the EU in nine months and yet, remarkably, there is still no government blueprint about its future relationship with the bloc.

“Some people are starting to say the lack of leadership is so woeful that Labour couldn’t be any worse,” one business figure told me. Companies are already voting with their feet, and moving investment out of the UK. In the motor industry, investment in the first six months of this year has almost halved since the same period last year. There might well be a last-minute deal on a customs union with the EU, but business needs certainty and to plan ahead. Its duties to shareholders and customers may mean preparing for the worst.

The country is already paying a price for Brexit and Theresa May’s procrastination. She should have seen it coming.

Frosty relations between frustrated business leaders and the government went into deep freeze this week after Brexiteer ministers attacked companies like Airbus, car firms and groups like the CBI for demanding more clarity on Brexit. Boris Johnson pointedly refused to deny that his response was “f*** business”. Other Brexiteers inevitably called the lobbying “Project Fear Mark 2”, a tired old line they trot out every time anyone dares to say anything about the consequences of leaving the EU.

Eurosceptics portray “foreign-owned” firms as doing the EU’s bidding in the negotiations, when Brexit means we need their investment more than ever. Foreign investment projects dropped by nine per cent in the year ending in March.

Thankfully Greg Clark, the business secretary, has finally gone public in a belated attempt to calm the industry’s nerves. He is sometimes too mild-mannered for his own good, although he does fight his corner in cabinet. In a dig at the Brexiteers yesterday, he contrasted the “actual experience” of employers who trade with Europe and the rest of the world with “a theoretical exercise in which you take decisions over the lives of people in imagined worlds.” Ouch.

Clark also called openly for a soft Brexit, including sticking close to the EU single market in services as well as goods. Some inside government hope the timely warnings from business will help May win the argument for close customs and regulatory links with the EU when the cabinet tries to agree a long overdue Brexit plan at Chequers in eight days. No doubt that will only reinforce suspicions among Eurosceptics that the business criticism is all part of a conspiracy to dilute Brexit. Yet the fears are real. Business people have been tearing their hair out for many months; the ticking clock has now persuaded them to go public.

May had her own warm words for business yesterday. But one industry figure complained: “She seems to ‘get it’ when we go to Downing Street. Then nothing happens.” Some Tory MPs fear her handling of Brexit will inflict serious damage to the Conservatives’ reputation as “the party of business”.

Tories will lazily assume company bosses have nowhere else to go, because the prospect of a Corbyn government sends chills down their spines. Yet Labour's “anti-business” image may be softening. True, there remain serious doubts in the business world about higher tax for individuals and companies; spending levels; a fear of exchange controls to prevent a run on the pound and how privatised industries would be renationalised. But Labour’s plans for infrastructure investment and its support for a customs union with the EU have been noted with approval.

So has the more emollient tone of John McDonnell, a self-described Marxist who said the 2008 crash was a “classic capitalist crisis” for which he had waited for a generation and was a unique opportunity for the left.

There was a time when Corbyn’s allies would not sup with the devil in the City of London but McDonnell now shares a cup of tea there (strictly no food, though, to avoid comparisons with the “prawn cocktail offensive” when Labour under Neil Kinnock started its retreat from left-wing policies in the 1980s). McDonnell’s olive branch is to tell business people he has “no hidden agenda” and if they can find other ways for him to achieve his goals, he will consider them.

Labour still has a lot of reassuring to do. But at least it now has a dialogue, in contrast to what has often been a dialogue of the deaf between ministers and business over Brexit. The Tories risk alienating their natural allies at their peril. It’s not about business leaders telling people how to vote. But when their warnings about investment and jobs come true, voters will know who to blame.