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John McDonnell says he 'picked brains' of Ed Miliband's team

Labour will deliver a post-Brexit "manufacturing renaissance" by borrowing billions for a national investment bank, John McDonnell has said.

The shadow chancellor told Sky News he wanted to create an "entrepreneurial state" by investing in infrastructure with a £100bn pot of cash in the newly created bank.

Mr McDonnell admitted he had been "picking the brains" of Ed Miliband, and other Labour figures who had been in government, to help formulate his economic plan, after similarities were noted over interventionist policy.

In his big set-piece speech to Labour's conference in Liverpool, Mr McDonnell will say that a Labour government would intervene in British industry to protect key sectors of the economy, such as steel.

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Speaking to Sky News ahead of his speech, he said: "We have been trying to really pick the brains of a lot of people who have served in government in the past, listening to their ideas but also about learning some lessons about how we go about things."

Mr McDonnell said a Labour government would be able to borrow at the "cheapest rate in history" and that it was necessary to "invest in short-term borrowing for long-term gain".

He said no one had "batted an eyelid" over the Bank of England's £70bn of quantitative easing.

:: McDonnell defends 'stain on humanity' attack

In his speech, he will accuse the Government of undermining UK industry's potential by cutting scientific research spending and subsidies to renewable energy.

He will also attack the Conservatives for planning to reduce investment in infrastructure such as housing and transport.

Mr McDonnell will tell the conference that the rules of globalisation "are being rewritten for us", with governments around the world moving away from reliance on free markets in favour of intervention.

He will cite the crisis caused by China flooding world markets with cheap steel, when the UK was slow to follow other major governments in taking action to protect its home-grown steel sector.

Mr McDonnell will say: "We need a new deal across our whole economy because, whatever we do in Britain, the old rules of the global economy are being rewritten for us.

"The winds of globalisation are blowing in a different direction. They are blowing against the belief in the free market, and in favour of intervention."

:: Corbyn faces reshuffle challenge over top team

Conservatives are "too blinkered by their ideology" to recognise the international shift away from free market policies, he will claim.

And he will promise: "Be certain the next Labour government will be an interventionist government.

"We will not stand by like this one has and see our key industries flounder and our future prosperity put at risk. When we return to government we will implement a comprehensive industrial strategy."

Mr McDonnell will add: "After Brexit, we want to see a renaissance in British manufacturing.

"And as we've committed ourselves, our government will create an entrepreneurial state that works with the wealth creators, the workers and the entrepreneurs to create the products and the markets that will secure our long-term prosperity."

Britain is well placed to take advantage of developments in digital technology which allow companies to site manufacturing facilities close to skilled workforces and potential markets, rather than in parts of the world able to offer the cheapest labour, the shadow chancellor will argue.

He will say this means the tide of factory closures, with firms shifting work overseas, is now turning and one in six British manufacturers is bringing jobs back home.

"Digital technology means production can be smaller-scale, in smaller, faster firms dependent on co-operation and collaboration, not dog-eat-dog competition," Mr McDonnell will say.

"The economies that are making best use of this shift are those with governments that understand it is taking place, and support their new industries and small businesses. We could be a part of that change here."

Britain needs to capitalise on its heritage of scientific research and engineering expertise, natural resources which could make it a world leader in renewables, and the talent and ambition available in all parts of the country, he will say.