Published: 10:04 AM June 13, 2018 Updated: 6:04 PM September 17, 2020

Shadow chancellor John McDonnell has admitted Labour is walking its own "tightrope" over Brexit.

He said Labour's position was a "traditional British compromise" aimed at the concerns of both Leave and Remain voters.

In a speech to City leaders he also urged businesses to speak up about their concerns with the Brexit process.

Mr McDonnell also sought to allay business concerns about the prospect of a Labour government, insisting that he would be "open and transparent" about the party's policies and there was "nothing up my sleeve".

After a dramatic day in Westminster where a late deal saw Theresa May stave off a Tory revolt, Mr McDonnell said: "I'm worried at the moment by the experience of the last 24 hours and possibly the experience of the next 24 hours.

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"Sometimes when maybe politicians don't rise to the occasion, sometimes it is the time for others to speak up and maybe speak up more loudly than they have up until now."

Mr McDonnell told TheCityUK conference: "Having witnessed what happened in Parliament yesterday, I thought it was shaming for the politicians involved.

"We have a prime minister that will be going off in a couple of weeks' time to meet other European leaders - in what could be the penultimate round of discussions to get in place a new arrangement for our relationship with Europe - unprepared and undecided as a result of some of the parliamentary activity yesterday."

But he acknowledged Labour's own difficulties on the issue: "We are walking on a tightrope at the moment.

"We campaigned for Remain but many of our MPs, including myself, now represent seats which voted heavily Leave."

Labour was "trying to bring the political reality of that vote to leave in line with the economic reality of what the consequences of that will mean in practice for jobs and living standards and sectors of our economy".

"We are trying to construct at the moment a traditional British compromise and we are trying to drag as many with us as possible both in government and elsewhere around some key elements of that compromise," he said.

Setting out the approach for a customs union and "full access to the internal market" which would be "underpinned by shared institutions and shared regulations", he said: "That's the type of deal either this government will be forced to enter into or a Labour government will implement."

Mr McDonnell defended Labour's approach to economic reform in his address to City bosses.

"Our objective is a prosperous economy that is economically but also environmentally sustainable," he said.

"But... if we are not to have the divisions in our country that we saw with the vote over Brexit, that prosperity needs to be shared more equally and that does mean looking at people's incomes.

"It does mean looking at ownership and the prospect of profit-sharing, it involves more representation of consumers and workers in decision-making.

"It does mean a fair taxation system."

He added: "We understand the problems of trust there are at the moment with regard to how the Labour Party has operated in the past and, to be honest, how we have been depicted in some of the media at the moment."

But he promised an "open and transparent" approach to policymaking, adding "there is nothing up my sleeve and when we go into government there will be no surprises".