The First Minister has said the UK is in the midst of a “rapidly deteriorating economic and financial crisis” as she urged the Government to act.
Nicola Sturgeon has said the House of Commons should be “immediately recalled” after the Bank of England was forced to step in on Wednesday, announcing plans to buy government bonds in a bid to avoid what it called a “material risk to UK financial stability”.
Speaking to the Conveners’ Group at the Scottish Parliament, Sturgeon said it would be “normal people” who would bear the brunt of the country’s financial woes.
The intervention from the central bank comes after the International Monetary Fund (IMF) urged the chancellor to “re-evaluate” the tax measures he put in place leading to the pound slumping again.
The pound slumped to its lowest level against the dollar since 1971 on Monday in the wake of a mini-budget which included the biggest programme of tax cuts for 50 years using more than £70bn in increased borrowing.
On Tuesday night, the IMF said it was “closely monitoring” the situation and urged the Kwasi Kwarteng to “re-evaluate the tax measures”.
Sturgeon tweeted asking: “Where even is [the Prime Minister]?”
Sturgeon said: “(The bank’s intervention) is really extraordinary and unprecedented and I think there needs to be very urgent and immediate action taken.
“I don’t think we should see the policies announced on Friday as inevitable now.
“I think as an immediate symbol of some kind of good sense being restored, the decision to abolish the top rate of tax should be reversed.”
The First Minister went on to say it would not be possible to “overstate the damage” of the so-called mini-budget to Scottish Government aims to tackle poverty and inequality.
She added: “The UK, as we speak right now, is in the midst of an unfolding and rapidly deteriorating economic and financial crisis and it’s going to be ordinary people that pay the price of that.”
The First Minister went on to warn that the UK may not have had a financial crisis such as this “possibly even including 2008” in living memory.
Sturgeon’s comments come as her deputy, John Swinney, who is in control of the Government’s finances while finance secretary Kate Forbes is on maternity leave, said he was “very concerned” about the IMF statement.
Both the SNP and Lib Dems have called for the Commons, which is currently on a conference recess, to be recalled.
The UK Treasury said the Government “will continue to work closely with the Bank [of England] in support of its financial stability and inflation objectives”.
Neither Kwarteng nor Truss have shown any suggestion that they would step back from the policies announced on Friday, many of which the PM had promised during her leadership campaign.
At a meeting on Wednesday, Kwarteng “underlined the government’s clear commitment to fiscal discipline” at a meeting with Bank of America, JP Morgan, Standard Chartered, Citi, UBS, Morgan Stanley and Bloomberg amongst others.
He also told the meeting that the plan announced on Friday would “expand the supply side of the economy through tax incentives and reforms, helping to deliver greater opportunities and bear down on inflation”, according to a Treasury readout.