LONDON (Reuters) - British Prime Minister Theresa May’s government is in disarray over Brexit but there is no majority in parliament for damaging the economy by leaving the EU without a deal, the opposition Labour Party’s finance minister-in-waiting said on Wednesday.

“We just can’t go on like this,” Labour finance chief John McDonnell, 67, said in a speech at Reuters in London. “We just cannot go on with this instability, uncertainty that there is in government, day by day and sometimes hour by hour.”

Since striking a draft deal with the EU last week, May has faced the most perilous crisis of her premiership with several ministers resigning.

May has pledged to fight on, warning that toppling her risks delaying Britain’s exit from the EU or leaving without a deal, a step that could thrust the economy into the unknown.

McDonnell, who along with Labour leader Jeremy Corbyn hopes to win power to build socialism in the world’s fifth largest economy, said there was not a majority in parliament for either May’s deal or for leaving the European Union without a deal.

There are several routes to power for Labour. McDonnell said the Brexit crisis made it hard to predict the exact path to Downing Street.

He said that while Labour was capable of forming a replacement minority government, his party was not yet ready to push for a no-confidence vote in May’s government. Labour will wait to see the final details of her deal before trying to force May out of power, McDonnell said.[S8N1VQ038]

If May’s government falls, McDonnell is hoping Labour can win power without holding an election. If not, Labour prefers a snap election to win its own mandate for an EU exit based around a permanent customs union with the EU, rather than holding a new Brexit referendum, he said.

“My fear is that if we did have another referendum, we might get the same or similar result and the country will still be divided,” he said “Somehow we have got to try and bring the country back together again.”

WAR OF ATTRITION

In theory, if May’s deal is rejected in parliament, Britain will be heading to leave the world’s biggest trading bloc without any deal. But McDonnell said opposition parties and pro-European Conservatives would block an immediate exit.

“I think an overwhelming majority oppose anything that smacks of being no deal,” he said.

“Then we could be into a situation of a war of attrition within parliament of amendments to legislation taking place and uncertainty continuing,” he said.

Britain's Shadow Chancellor of the Exchequer, John McDonnell, speaks during a Reuters Newsmaker event in London, Britain November 21, 2018. REUTERS/Toby Melville

Asked about how many Labour members of parliament might rebel and vote for May’s Brexit deal, he indicated none would.

“I think we’ll hold our side now. I really do, and we have done on the votes this week,” he said.

BREXIT AND MARX

Labour winning power would represent a major change for Britain, reversing three decades of almost uninterrupted economic liberalisation started by Conservative Margaret Thatcher and continued under more centrist Labour governments.

McDonnell has been at the vanguard of a left-wing revival within the opposition Labour Party. He has promised sweeping nationalisation, higher public spending and an overhaul of the banking system.

Some in the world’s preeminent financial capital are spooked by the prospect of a socialist Labour government, though McDonnell said he had no unpleasant surprises up his sleeve.

“Under a Labour government, there wouldn’t be a financial crisis,” he quipped to an audience of finance executives and journalists in Canary Wharf. When asked if Labour had done enough to engage with business, he said: “No, not really”.

Asked if he was a Marxist or a capitalist, McDonnell said he was a socialist but that Karl Marx had “one of the best analyses of how capitalism works”.