Two of the so-called "IS Beatles" have been taken out of Syria to "a secure location controlled by the US", President Donald Trump has said.
El Shafee Elsheikh and Alexanda Kotey are accused of being part of an Islamic State group cell which kidnapped and murdered Western hostages in Syria.
The pair - who are from London - are in the custody of the American military, according to US media reports.
In a tweet, Mr Trump described them as "the worst of the worst".
He said the decision to remove them from Syria had been taken "in case the Kurds or Turkey lose control".
The New York Times and Washington Post say the pair have been removed from a prison run by Kurdish militia in northern Syria.
The announcement comes after the US withdrew its forces from the region this week.
On Wednesday President Trump told reporters the US had transferred "some of the most dangerous IS fighters" amid fears they could escape custody as Turkish troops invade Kurdish-held territory in northern Syria.
The Kurds - who helped defeat IS in Syria and were key US allies in that fight - guard thousands of IS fighters and their relatives in prisons and camps in areas under their control. It is unclear whether they will continue to do so if fighting breaks out.
Other members of the IS cell - dubbed "The Beatles" because of their British accents - included Mohammed Emwazi, known as Jihadi John, who was killed in a US air strike in 2015, and Aine Davis, who has been jailed in Turkey.
Emwazi is thought to have killed US journalist James Foley in 2014.
All four were radicalised in the UK before travelling to Syria. Elsheikh and Kotey have since been stripped of their British citizenship.
The pair are designated as terrorists by the US State Department, which links them to the group's executions and "exceptionally cruel torture methods" including electric shocks, waterboarding and mock executions.
They were said to have been captured by Kurdish forces in January 2018.
The New York Times reports the US is planning to take Elsheikh and Kotey to Virginia - one of the few states that still carries out the death penalty - where they will be put on trial.
However, shadow foreign secretary Emily Thornberry said they should "come home to face justice".
A Home Office spokesperson said "it would be inappropriate to comment whilst legal proceedings are ongoing".
It remains to be seen whether the evidence against the pair amassed by British investigators will be handed over in full to US authorities.
Former Prime Minister Theresa May, when she was home secretary in 2015, told Washington the UK would only hand over evidence after receiving a categorical guarantee that neither man would be executed.
The UK has long sought and obtained such a death penalty assurance from the US.
That position was reiterated by Mrs May's successor, Amber Rudd, but then reversed after Sajid Javid entered the Home Office in April 2018.
Mr Javid decided to hand over 600 witness statements, without seeking any kind of guarantee that Elsheikh and Kotey would not be put to death.
The issue is currently being decided by the UK Supreme Court.
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MPs will be called to Parliament for a special Saturday sitting in a decisive day for the future of Brexit.
Parliament will meet on 19 October after a crunch EU summit - seen as the last chance for the UK and EU to agree a deal ahead of 31 October deadline.
If a deal is agreed, Boris Johnson will ask MPs to approve it - but if not, a range of options could be presented.
The BBC's Laura Kuenssberg says these could include leaving without a deal, and halting Brexit altogether.
MPs will have to agree a business motion in the Commons for the sitting to take place.
If agreed, the additional day would coincide with an anti-Brexit march run by the People's Vote campaign, which could see thousands of protesters heading to Westminster.
Labour leader Jeremy Corbyn says his MPs will attend and "do everything we can" to stop a no-deal Brexit.
Letter row
The House of Commons has only sat on four Saturdays since 1939, including on 2 September that year, due to the outbreak of World War Two.
The last time there was a Saturday sitting was 3 April 1982, due to the invasion of the Falkland Islands.
The prime minister has said he is determined that the UK will leave the EU on 31 October, despite legislation, known as the Benn Act, which requires him to write to the EU requesting a further delay if a deal is not signed off by Parliament by 19 October - or unless MPs agree to a no-deal Brexit.
No 10 has insisted Mr Johnson will comply with the law, but Laura Kuenssberg says there are still conversations going on in Downing Street about writing a second letter, making the case that a delay is unnecessary.
Mr Corbyn said: "The idea that the prime minister will defy the law yet again is something that needs to be borne in mind" - appearing to reference the unlawful suspension of Parliament last month.
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He added: "The prime minister has an opportunity on 19 October to announce he has obeyed the law, signed the letter, and sent it off to Brussels to ask for the extension, which will give us time to work out a sensible relationship with Europe.
"We will do everything we can in Parliament, including legislating if necessary, to ensure [Mr Johnson] makes that application."
'Very intense'
Talks are ongoing between the UK and EU after Mr Johnson submitted new proposals for a Brexit deal, centred on replacing the Irish backstop - the policy negotiated between Theresa May and the EU to prevent a hard border returning to the island of Ireland.
However, the EU has said there would have to be "fundamental changes" to the ideas put forward in order for them to be acceptable.
For example, the Irish Taoiseach (Prime Minister) Leo Varadkar told the Dail (Parliament) on Wednesday the UK's proposal to take Northern Ireland out of the EU customs union was a "grave difficulty" for his government.
The UK's chief negotiator, David Frost, will meet European Commission officials later - but sources on both sides told BBC Brussels reporter Adam Fleming that technical talks had effectively reached the limit of what they could achieve.
However, Home Secretary Priti Patel said the government had been putting in "very intense" work in recent weeks to get a deal, so "nothing is over".
While getting an agreement was still their preference, they were "absolutely clear" that the UK would leave the EU on 31 October "come what may", she added.
Brexit Secretary Steve Barclay and the EU's chief negotiator, Michel Barnier will also have a lunch meeting on Thursday to discuss the state of play.
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As the clock ticks down towards the summit, the political tension has been rising.
A row broke out on Tuesday after a No 10 source said a call between Mr Johnson and the German chancellor, Angela Merkel, had made a deal "essentially impossible", claiming she made clear a deal based on his proposals was "overwhelmingly unlikely".
Mrs Merkel's office said it would not comment on "private" conversations.
But the President of the European Council Donald Tusk sent a public tweet to Mr Johnson, accusing him of playing a "stupid blame game" - a criticism echoed by a number of opposition parties in the UK.
On Tuesday night, Mr Varadkar spoke to Mr Johnson on the phone for 45 minutes, and told broadcaster RTE afterwards it would be "very difficult" to reach an agreement before the end of the month.
However, the two leaders are expected to meet for further talks later this week, and Mr Varadkar said he was "willing to work to the last moment to get a deal", just "not at any cost".
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This special sitting will be a huge day.
That is because it will be the moment when Boris Johnson either returns to chants of "hail the conquering hero" - if he manages to get this elusive Brexit deal - or, more likely, returns with no-deal and has to set out his next steps.
And we are hearing that No 10 may seek to seize the initiative by putting down a series of motions for MPs to vote on - in other words asking them do they want to leave with no deal, do they want to revoke Article 50, etc.
But at the same time that Boris Johnson wants to use that moment to try and grasp the initiative, it is clear the rebel alliance of opposition MPs also wants to seize the day.
They want to ensure Boris Johnson sits down, gets out the Basildon Bond and writes that letter to the European Commission asking for a further delay.
So both sides are now poised to try and gain control of that Saturday to map out the next steps, assuming - and I think it is a fairly widespread assumption in Westminster now - that there is not going to be a deal.
A No 10 source has said a Brexit deal is "essentially impossible" after a call between the PM and Angela Merkel.
Boris Johnson and the German chancellor spoke earlier about the proposals he put forward to the EU - but the source said she made clear a deal based on them was "overwhelmingly unlikely".
The BBC's Adam Fleming said there was "scepticism" within the EU that Mrs Merkel would have used such language.
And the EU's top official warned the UK against a "stupid blame game".
President of the European Council Donald Tusk sent a public tweet to Mr Johnson, writing: "What's at stake is not winning some stupid blame game. At stake is the future of Europe and the UK as well as the security and interests of our people."
.@BorisJohnson, what’s at stake is not winning some stupid blame game. At stake is the future of Europe and the UK as well as the security and interests of our people. You don’t want a deal, you don’t want an extension, you don’t want to revoke, quo vadis?
Ireland's Tánaiste (Deputy Prime Minister), Simon Coveney said a deal was still possible but "not any at cost" - and the UK must accept it had "responsibilities" on the island of Ireland.
Mrs Merkel's spokesman said her office would not reveal details of "private, closed" conversations.
But Norbert Rottgen, an ally of the chancellor who is chair of the Bundestag's Foreign Affairs Committee, said there was "no new German position".
He tweeted that a deal based on the UK's latest proposals had "been unrealistic from the beginning and yet the EU has been willing to engage".
The BBC's Europe editor Katya Adler said it was "no secret" Berlin found the UK's proposed new customs solution for Northern Ireland problematic, but it had not yet given up hope.
Berlin keen to underline that Chancellor Merkel has repeated over and again that she will work “till last moment” to get a deal. Sources say she remains interested in avoiding a no deal Brexit and thinks a deal is possible /2
There has been little sign of progress in talks between the two sides since Mr Johnson sent new proposals for a deal to Brussels last week, with the EU demanding "fundamental changes".
Officially, the prime minister's spokesman said the talks - aimed at securing an agreement at next week's EU summit - were "at a crucial point", but denied they were over.
Scotland's First Minister and leader of the SNP, Nicola Sturgeon, said Downing Street's response to the phone call was an "attempt to shift the blame for the Brexit fiasco".
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And Labour's shadow Brexit secretary Sir Keir Starmer told MPs the government was "intent on collapsing the talks and engaging in a reckless blame game".
"The stark reality is the government put forward proposals that were designed to fail," he said, adding that it was "beneath contempt" that, according to a Downing Street source reported by the Spectator, the UK could withdraw security co-operation from other EU countries if it were forced to remain beyond 31 October.
The PM has insisted the UK will leave the EU on that date, with or without a deal.
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That is despite legislation passed by MPs last month, known as the Benn Act, which requires Mr Johnson to write to the EU requesting a further delay if no deal is signed off by Parliament by 19 October - unless MPs agree to a no-deal Brexit.
The key focus of the new UK plans is to replace the so-called backstop - the policy negotiated by Theresa May and the EU to prevent a hard border returning to the island of Ireland - which has long been a sticking point.
After presenting them, government sources hoped the sides might be able to enter an intense 10-day period of talks almost immediately, but a number of senior EU figures, including Irish Taoiseach Leo Varadkar, warned they did not form the basis for deeper negotiations - even if they believed a deal could still be done.
The No 10 source said Tuesday morning's phone call - which was not discussed at cabinet - had been a "clarifying moment", adding: "Talks in Brussels are close to breaking down, despite the fact that the UK has moved a long way."
The UK's chief negotiator, David Frost, is continuing to meet EU counterparts in Brussels, but one European official said he had so little room for manoeuvre, it called into question whether Britain was serious about getting a deal.
No-one really wants to comment directly on this phone call - certainly not Berlin - but talking to EU officials and diplomats in Brussels, there is considerable scepticism.
That's because the words attributed to Angela Merkel do not reflect the EU's agreed language.
For one, Mrs Merkel and the EU have repeatedly said they will keep talking to the last second and will not pull the plug before that.
And secondly, the No 10 source claims the EU wants to keep Northern Ireland permanently "trapped" in the customs union - Brussels insists it doesn't want that at all, it just wants the option for Northern Ireland stay inside temporarily until something else is worked out.
So as I say, scepticism. It could be a misinterpretation or it could be a deliberate bit of spin, because we're now entering into a blame game about whose fault it is that progress isn't being made.
Under Mr Johnson's proposals, which he calls a "broad landing zone" for a new deal with the EU:
Northern Ireland would leave the EU's customs union alongside the rest of the UK, at the start of 2021
But Northern Ireland would continue to apply EU legislation relating to agricultural and other products, if the Northern Ireland Assembly approves
This arrangement could, in theory, continue indefinitely, but the consent of Northern Ireland's politicians would have to be sought every four years
Customs checks on goods traded between the UK and EU would be "decentralised", with paperwork submitted electronically and only a "very small number" of physical checks
These checks should take place away from the border itself, at business premises or at "other points in the supply chain"
The No 10 source said the UK was not willing to move away from the principle of providing a consent mechanism for Northern Ireland or the plan for leaving the customs union, and if the EU did not accept those principles, "that will be that" and the plan moving forward would be an "obstructive" strategy towards Brussels.
They also accused the EU of being "willing to torpedo the Good Friday agreement" - the peace process agreed in Northern Ireland in the 1990s - by refusing to accept Mr Johnson's proposals, arguing the plan is key to respecting the so-called "principle of consent".
But Mr Varadkar has warned the Johnson plan could actually undermine that principle by giving one party in Northern Ireland a veto over what happens to the country as a whole.
It's not the official policy of the government yet...
But in government and EU circles it is becoming more likely by the hour that there will not be an agreement at next week's EU council.
There is no intention in Downing Street to move away from the broad concepts of what they are suggesting regarding either customs or the so-called principle of consent for gaining approval for the PM's plans from Northern Irish politicians.
So short of a political escape worthy of Houdini, this prime minister is moving towards making the case for leaving without a deal.
To their opponents, that might appear petulant and counter productive, but be in no doubt, if there is no deal this month, Boris Johnson's government would not suddenly play nice.
And in the likely event that there is an extension, for political reasons No 10 wants to give the impression it was forced into that position.
Timeline: What's happening ahead of Brexit deadline?
Tuesday 8 October - Last working day in the House of Commons before it is due to be prorogued - suspended - ahead of a Queen's Speech to begin a new parliamentary session.
Monday 14 October - The Commons is due to return, and the government will use the Queen's Speech to set out its legislative agenda. The speech will then be debated by MPs throughout the week.
Thursday 17 October - Crucial two-day summit of EU leaders begins in Brussels. This is the last such meeting currently scheduled before the Brexit deadline.
Saturday 19 October - Date by which the PM must ask the EU for another delay to Brexit under the Benn Act, if no Brexit deal has been approved by Parliament and they have not agreed to the UK leaving with no-deal.
Thursday 31 October - Date by which the UK is due to leave the EU, with or without a withdrawal agreement.
The British government warned Tuesday that it will be “essentially impossible” to strike a Brexit deal with the European Union if the bloc continues to stand by a key trade demand involving Northern Ireland.
The grim assessment from Prime Minister Boris Johnson's office following a phone call between the British leader and German Chancellor Angela Merkel comes just weeks before an Oct. 31 deadline to leave the EU. The EU has been responding coolly to the U.K.'s plan for maintaining an open Irish border after Brexit, which has been the main stumbling block to a deal.
Downing St. said Merkel told the prime minister Tuesday morning that "a deal is overwhelmingly unlikely" unless Northern Ireland remains in a customs union with the EU — something the U.K. says it can't allow.
It added that "if this represents a new established position, then it means a deal is essentially impossible not just now but ever."
A European Union flag flies near Parliament in London on Tuesday. (AP)
Currently, goods and people flow freely between EU member Ireland and the U.K.'s Northern Ireland. The EU and the U.K. have agreed there must be no checks or infrastructure along that border, yet Britain wants to leave the EU's customs union so it can strike new trade deals around the world, making some sort of checks on goods crossing that border all but inevitable.
Under a proposed U.K. Brexit plan there would be customs checks, but Britain says they could be conducted away from Northern Ireland’s border.
However, EU officials oppose any customs checks and are skeptical of U.K. claims they could be achieved through largely untested technology. EU leaders also have been sharply critical of a proposal that would give Northern Ireland's legislature an effective veto on key elements of the Irish border arrangements in the future.
Johnson has urged European leaders to compromise and sit down for face-to-face talks. So far, the EU is resisting, saying the U.K. must show more "realism" in its proposals.
“At stake is the future of Europe and the UK, as well as the security and interests of our people,” European Council President Donald Tusk tweeted at Johnson on Tuesday, adding that “what’s at stake is not winning some stupid blame game.”
Britain's Prime Minister Boris Johnson speaks to mental health professionals during his visit to Watford General Hospital, in Watford, on Monday. (AP)
The last scheduled opportunity to reach a deal is Oct. 17-18, when all 28 EU leaders, including Johnson, are due to meet in Brussels. French President Emmanuel Macron has said the EU will decide by the end of this week whether a deal is possible, or whether the two sides should buckle up for a rocky no-deal departure.
Johnson insists the U.K. will leave the EU on Oct. 31 even without a deal. But many in the EU — and in Britain — are skeptical that Britain will leave the bloc that day, because the U.K. Parliament has passed a law compelling the government to ask the EU for a delay to Brexit if no deal is agreed upon by Oct. 19.
Keir Starmer, the Brexit spokesman for the main opposition Labour Party, said Downing St.’s statement Tuesday was "yet another cynical attempt by No. 10 to sabotage the negotiations."
"Boris Johnson will never take responsibility for his own failure to put forward a credible deal. His strategy from Day One has been for a no-deal Brexit," he said.
A No 10 source says a Brexit deal is "essentially impossible" after a call between the PM and Angela Merkel.
Boris Johnson spoke to the German chancellor earlier about the proposals he put forward to the EU - but the source said she made clear a deal based on them was "overwhelmingly unlikely".
They also claimed she said a deal would never be possible unless Northern Ireland stayed in a customs union.
But Labour called it a "cynical attempt to sabotage the negotiations".
Shadow Brexit secretary Sir Keir Starmer said Mr Johnson "will never take responsibility for his own failure to put forward a credible deal", and called on Parliament to "unite prevent this reckless government crashing us out of the EU".
The latest developments came after leaks from the European Commission showed major concerns from the EU about the UK's Brexit plan.
Mr Johnson sent new proposals to Brussels last week, with the key focus being on replacing the so-called backstop - the policy negotiated by Theresa May and the EU to prevent a hard border returning to the island of Ireland - which has long been a sticking point.
But after the phone call, the No 10 source accused the EU of being "willing to torpedo the Good Friday agreement" - the peace process agreed in Northern Ireland in the 1990s by refusing to accept Mr Johnson's proposals.
The government argues allowing Stormont to approve part of the PM's plan is key to respecting the so-called "principle of consent" in the Good Friday Agreement, but Irish Prime Minister Leo Varadkar has warned it could actually undermine that principle by giving one party in Northern Ireland a veto over what happens to the country as a whole.
'Scupper a delay'
Mr Johnson has insisted the UK will leave the EU on the Brexit deadline of 31 October, with or without a deal. That is despite legislation passed by MPs last month known, as the Benn Act, which requires Mr Johnson to write to the EU requesting a further delay if no deal is signed off by Parliament by 19 October - unless MPs agree to a no-deal Brexit.
The government has not denied the briefing, which also said Mr Johnson "will do all sorts of things to scupper a delay" to leaving the EU.
Earlier, the BBC's political editor Laura Kuenssberg said there was a growing expectation in government Brexit talks would fail before the week was out.
'Obstructive' strategy
After presenting the plans to the EU, government sources hoped the UK might be able to enter an intense 10-day period of negotiations almost immediately, with the aim of coming to a final agreement at an EU summit on 17 October.
But a government source told the BBC the UK was not willing to move away from the principle of providing a consent mechanism for Northern Ireland or the plan for leaving the customs union.
And if the EU does not accept these principles, "that will be that" and the plan moving forward would be an "obstructive" strategy towards the EU.
The No 10 said the call between Mr Johnson and Ms Merkel was a "clarifying moment", adding: "Talks in Brussels are close to breaking down, despite the fact that the UK has moved a long way."
What are the PM's border plans?
Under Mr Johnson's proposals, which he calls a "broad landing zone" for a new deal with the EU:
Northern Ireland would leave the EU's customs union alongside the rest of the UK, at the start of 2021
But Northern Ireland would continue to apply EU legislation relating to agricultural and other products, if the Northern Ireland Assembly approves
This arrangement could, in theory, continue indefinitely, but the consent of Northern Ireland's politicians would have to be sought every four years
Customs checks on goods traded between the UK and EU would be "decentralised", with paperwork submitted electronically and only a "very small number" of physical checks
These checks should take place away from the border itself, at business premises or at "other points in the supply chain"
What about the EU?
After receiving the proposals, the EU pledged to examine them carefully.
But a number of senior figures, including Mr Varadkar, warned the proposals did not form the basis for deeper negotiations - even if they believed a deal could still be done.
French President Emanuel Macron said the EU would decide at the end of the week whether a new deal was possible.
But a leaked presentation to EU diplomats revealed they were unwilling to accept the UK's plans committing to no checks on either side of the Irish border if the Northern Ireland Assembly - Stormont - is granted a veto and there is no guarantee of checks on the UK side.
BBC Brussels correspondent Adam Fleming said EU negotiators were "so nonplussed by the proposal they asked if it was a mistake".
It is understood the UK also wants continuing access to several EU trade databases, even if Stormont withholds its consent for the new arrangements.
In the report, the think tank said government borrowing was likely to rise to £100bn and total debt would soar to 90% of national income.
The IFS's director, Paul Johnson, said the government was "now adrift without any effective fiscal anchor".
But after the warning - directed at the chancellor as he prepares his annual budget - the Treasury said any decisions would be made "with a view to the long-term sustainability of the public finances".
The Independent Workers Union of Great Britain is supporting three of its members to force the government to seek an extension to the deadline over fears their workers' rights would be watered down.
The government has promised EU-law derived employment rights will remain in law after Brexit - such as minimum paid holiday and working hours regulations - but the union says ministers would have free rein to change them after the UK leaves the EU.
The case follows a challenge in the High Court by civil rights group Liberty, which is seeking assurances that the government will abide by the Benn Act to seek an extension if no deal is agreed before 19 October.
In Scotland, a separate challenge has been brought to the Inner House of the Court of Session - Scotland's highest court - by businessman Dale Vince, Jolyon Maugham QC and SNP MP Joanna Cherry, to ask judges to consider whether a court can sign a Brexit extension request letter on behalf of the government.
The court will also hear an appeal against a ruling, given on Monday, that Mr Johnson can be trusted to apply the law.
Timeline: What's happening ahead of Brexit deadline?
Tuesday 8 October - Last working day in the House of Commons before it is due to be prorogued - suspended - ahead of a Queen's Speech to begin a new parliamentary session.
Monday 14 October - The Commons is due to return, and the government will use the Queen's Speech to set out its legislative agenda. The speech will then be debated by MPs throughout the week.
Thursday 17 October - Crucial two-day summit of EU leaders begins in Brussels. This is the last such meeting currently scheduled before the Brexit deadline.
Saturday 19 October - Date by which the PM must ask the EU for another delay to Brexit under the Benn Act, if no Brexit deal has been approved by Parliament and they have not agreed to the UK leaving with no-deal.
Thursday 31 October - Date by which the UK is due to leave the EU, with or without a withdrawal agreement.
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LONDON — He is the bane of bankers, a bearded, teetotaling socialist often derided in the British press and in Parliament for his efforts to suppress dissent inside the Labour Party and his radical plans to remake the British economy.
But in the unmitigated chaos of Brexit, Jeremy Corbyn, the opposition Labour leader, is trying to remint himself as a safe pair of hands, and an unlikely salve to jittery British markets panicked by Prime Minister Boris Johnson’s plans for an abrupt split with the European Union.
And, surprisingly, it might be working.
“‘What method of execution would you prefer?’ is basically the question,” said David Willetts, a Conservative former minister who was once an aide to Margaret Thatcher. “Corbyn would in normal circumstances look like an off-the-scale risky gamble. However, Brexit is the single biggest change in Britain’s economic and political relations in 40 years, so Brexit itself is an off-the-scale economic gamble.”
With an early election looming, Mr. Johnson’s Conservative Party, once a friend to big business and a refuge for establishment figures of all types, has torched one convention after another, creating dust-ups with Queen Elizabeth II, the Supreme Court and Parliament. The prime minister’s proposed Brexit deal, proffered last week to Brussels, was met with so much dismay that most analysts believe he is fully resigned to Britain leaving the bloc without one.
That has turned Mr. Corbyn — a lifelong rabble-rouser and one of the most left-wing leaders in Labour’s century-long history — into an improbable figure of restraint. He is implacably opposed to a no-deal Brexit and promises a second referendum that could reverse the split altogether.
Suddenly, banks have been left grudgingly weighing the benefits of a party run by neo-Marxists, radical union leaders and lawmakers with a history of supporting communist regimes.
And some parts of Labour, famously anti-establishment under Mr. Corbyn, are fretting that they will somehow look like the soberer party in an election dominated by voters’ desire for a shake-up.
“The Tories are promising the most radical and extreme economic disruption in nearly 200 years,” said Tom Kibasi, the director of the left-leaning Institute for Public Policy Research, calling a no-deal Brexit the biggest upheaval since the British Empire abolished slavery in the 1830s. “The scale of economic chaos the Tories are promising means that any of Labour’s policies pale in significance.”
But, he said: “The issue is right now the public have a clear appetite for change. The question is, are you going to offer them positive change, or change that’s chaos and disruption?”
Mr. Corbyn’s new sheen of acceptability has not yet paid dividends with the public. In carving out the middle ground on Brexit — promising a second referendum, but refusing to commit to one side or the other — he has alienated both Leave and Remain voters. And analysts say it is not clear whether Mr. Corbyn’s plans for a generational reordering of the economy will cut through as long as voters remain obsessed with Brexit.
Despite his involvement in efforts to avert a no-deal Brexit, Mr. Corbyn is still despised by a cohort of anti-Brexit lawmakers, some of whom blame him for failing to get a grip on anti-Semitism in the Labour Party. Those lawmakers have resisted trying to unseat the government and install him as a caretaker prime minister.
But in Britain’s winner-take-all voting system, Labour is still the party best positioned to wrench power from the Conservatives. That has narrowed the choice awaiting Britain, some analysts say: a Johnson-led government increasingly bent on a no-deal Brexit, or a Corbyn-led government that would stop it.
And even for some of Mr. Corbyn’s biggest foes, that is an easy choice to make.
Ken Clarke, a Conservative former chancellor of the Exchequer who has locked horns with Labour for decades, said last month, “Both are awful prospects, but I think a no-deal Brexit could cause far more damage to our future economic success than Corbyn.”
Even in the City of London, there is growing feeling that the financial industry could withstand the shock of Mr. Corbyn’s hard-left economic plans if that were what it had to do to avoid Britain leaving the European Union without a deal managing future relations. For financial analysts, there is nothing that tempers fears of Labour’s plans to redistribute wealth and assets like an even more daring economic experiment: cutting adrift an export market of half a billion people.
“Between a Corbyn government that delivers a second referendum at the cost of some policies which from an economic perspective we may not be entirely happy with, and a Conservative government that is broadly pro-business but does the irreversible damage of the U.K. leaving without a deal, I’d choose the former,” said Christian Schulz, an analyst for Citi.
Peter Dixon, a senior economist for Commerzbank, said companies could adjust to Mr. Corbyn, but not as easily to the sudden turmoil of a no-deal Brexit.
“They’re looking at the prospect of a no-deal and saying, actually, this would be an even bigger shock to the economy than a Corbyn government because perhaps at least you’d have a period of time to adjust,” he said.
For Britain’s financial district, it is the end of an era of being able to freely hammer Labour for moderate tax increases, safe in the knowledge that the Conservative Party would follow market orthodoxy on open trading arrangements.
“The markets can’t have their cake and eat it,” said Paul Dales, the chief United Kingdom economist for Capital Economics, a research company.
Mr. Corbyn, a vegetarian with a grandfatherly manner who for decades wandered the hard-left hinterlands of the Labour Party, has not made himself many friends in the City of London with a series of bold proposals he has rolled out over the last few weeks: creating a state-owned pharmaceutical company, attacking private schools, forcing companies to make their workforces into shareholders.
He also wants to nationalize the railways, raise new taxes on the financial industry and create a four-day workweek.
Those policies could permanently undo the anti-regulatory crusade waged 40 years ago by Ms. Thatcher, cementing high-tax, pro-workforce rules. Labour supporters hope these measures will address gaping inequality, while critics fear they are built on an outdated vision of Britain’s economy.
It’s still, to many if not most bankers, a program that looks politically repugnant and personally costly. And the calculation that it might be less catastrophic to banks than a no-deal Brexit remains hotly contested in some circles.
But analysts say the markets have taken comfort in the fact that even if Mr. Corbyn performs well in the next election, he will probably not win enough seats in Parliament to govern alone. Being forced to rely on the backing of one or more smaller parties, like the centrist Liberal Democrats or the economically center-left Scottish National Party, would rein in Labour’s most radical plans.
Labour has also made a concerted, if low-key, effort in recent months to prepare the financial industry for a turnover in Downing Street. Industry representatives say they have largely left impressed by John McDonnell, Labour’s Treasury spokesman, describing him as solicitous of their needs when it comes to Brexit and matter-of-fact in laying out his party’s more confrontational economic plans.
“John McDonnell is someone they can talk to, do business with,” said Lord Robert Kerslake, a former civil service chief who has set up some of Labour’s meetings with businesspeople.
(Bankers cannot, though, buy dinner for Mr. McDonnell, who has protected his abstemious reputation — and the party’s anti-elite bona fides — by insisting on “tea and biscuits, nothing else,” Lord Kerslake said. That is a contrast with the “prawn cocktail offensive” that a more corporate Labour Party waged under Tony Blair in the City of London two decades ago.)
Labour’s rehabilitation in the eye of the markets mirrors a lift that leftist parties have gotten across Europe simply for treading cautiously on European trade. Facing up against right-wing, populist campaigns against European integration, left-wing parties, said Mr. Schulz, the Citi analyst, are finding that “their pro-Europe credentials ultimately trumped question marks about their economic policies.”
Whatever respectability Mr. Corbyn has won in the bare-knuckled fight over Brexit may not last long. One of his biggest selling points for bankers, after all, is that some of them think they can reverse his policies within a matter of years. And some of his grudging Conservative backers, like Guto Bebb, a former junior defense minister, have in mind nothing more than “a short-term Jeremy Corbyn government” that would avert what he called “the generational damage that would be caused by a no-deal Brexit.”
Mr. Corbyn’s more immediate problem is not only pitching himself as a sober option in an era of political madness, but also how to make his proposals stand out amid fervent campaigning on Brexit on all sides.
Mr. Johnson, analysts say, has a slew of ready-made slogans for his anti-establishment, no-holds-barred Brexit campaign, even if they disguise the tumult that is almost sure to follow. Mr. Corbyn, on the other hand, has to make a knottier case for caution on Brexit.
“It depends whether the Tories are found out or not,” Mr. Kibasi said. “Labour’s story is more complicated, if more truthful.”
