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Shadow chancellor John McDonnell has revealed he is preparing a Labour budget, as he predicted the party would win a "reasonable majority" if there was a snap general election.

While Labour have been trailing the Conservatives in the polls, Mr McDonnell said: "We need another two to three points to take us into government and that is what we will get when we go into that campaign."

With Theresa May's Tories no longer having a Commons majority, the shadow chancellor said that Parliament "is so unstable it is completely unpredictable".

And he told a fringe event at the Scottish Labour conference in Dundee that he and Jeremy Corbyn were already preparing for government.

While he accepted it was "almost impossible" for Labour to force a general election under the current system of fixed term parliaments, Mr McDonnell said: "Just in case there is an election we are preparing for an election, we've got all the campaign plans ready. We've been testing messaging, we've got the grid ready to go.

(Image: PA)

"The grid is who goes where in terms of shadow cabinet all round the country, where Jeremy's rallies are going to be, so if there is a general election we go straight into election mode."

Mr McDonnell also told Labour activists that as part of the preparations he was now considering his first budget.

He said: "I'm going through a first budget exercise, so I'm sitting down with all the shadow cabinet teams to talk about their plans, costing them and then look at priorities.

"We're in that situation where literally we're preparing for government, we're preparing for the election."

In his main stage speech at the Scottish Labour conference today, Mr McDonnell said MPs must make sure "the extremists on the Conservative backbenches don't get to fulfil their their terrifying dream of a no-deal Brexit ".

(Image: PA)

He added Labour would do "everything we possibly can to make sure this never comes to pass".

With the Government's meaningful vote on the Brexit deal just days away, he said: "The reason we are facing this potential cliff edge is because we have a Prime Minister who has bungled the negotiations and is left with only one desperate strategy of running down the clock.

"And we have a spineless Chancellor who is too weak to challenge her and more interested in saving his job than saving the country."

Meanwhile Mr McDonnell pledged a future Labour government would cut consumer energy bills.

Labour has already proposed bringing services such as water, energy and rail back into public ownership.

"Bill payers are subsiding shareholders while companies are not making essential investment for the future energy sustainability of the country," Mr McDonnell said.