WORSE THAN 2008
»FM warns ordinary people will pay price for Tory chaos »Inevitable rise in interest rates to hit Scottish families
NICOLA Sturgeon has warned the financial crisis unfolding the UK will be worse than the banking crash of 2008.
The First Minister said yesterday that ordinary people would be left to pay the price of the disastrous mini-budget announced by Tory Chancellor Kwasi Kwarteng.
And the SNP leader insisted it was an “inevitability” that interest rates would rise sharply in coming weeks, which would have a “profound effect” on families in Scotland with mortgages and credit card debt.
Speaking at a Holyrood committee of MSPs, she called on the UK Government to scrap plans to slash income tax for the wealthiest in a bid to reassure the global financial markets.
It comes as Prime Minister Liz Truss and Kwarteng face demands to recall the House of Commons in an attempt to calm markets following the chaos unleashed by the Chancellor’s mini-budget last week.
The Bank of England was forced to take emergency action, buying up long-term Government bonds because of a “material risk to UK financial stability” while the International Monetary Fund (IMF) urged the Chancellor to change course.
Kwarteng is due to address the Tory conference in Birmingham on Monday but faces calls to speak to the nation urgently.
Sturgeon told MSPs: “I don’t think it is possible to overstate the damage of this budget to what we’re trying to do in terms of tackling poverty and inequality.
“The UK is in the midst of an unfolding and rapidly deteriorating economic and financial crisis. It’s going to be ordinary people that pay the price of that.
“I don’t think we’ve had a more serious situation – including 2008, which was a global financial cash – in our memories.”
Sturgeon warned the collapse in the value of the pound “will fuel inflation and that will make the cost of living crisis worse”.
She added: “There is now an inevitability there will be a sharp rise in interest rates and that will push more people into very serious financial stress.
“We’ve had warnings in the last 24 hours from the IMF and have had the quite extraordinary intervention from the Bank of England, who are concerned about serious financial instability. There is speculation that pension funds are about to fall over.
“To have the Bank of England
staging an emergency intervention to try and reduce the damage of the UK Government’s own policies really is extraordinary.
“There needs to be very urgent and immediate action taken.
“I don’t think we should see the policies announced as inevitable. The decision to abolish the top rate of tax should be reversed.”
Scottish Lib Dem deputy leader Wendy Chamberlain said: “Truss and Kwarteng have been in Government for three weeks and the IMF has already been forced to issue a statement on their reckless economic policy.
“Both are totally blinded by ideology, which is making millions across the UK suffer. We need to recall Parliament to fix this mess.”
One former Tory MSP admitted yesterday that the UK now needed a Labour government.
Adam Tomkins, who left Holyrood last year after one term to return to teaching law at Glasgow University, claimed the Conservatives’ time in power “is up”. He described Shadow Chancellor Rachel Reeves’s conference speech as “more prudent” than Kwarteng’s plan and said: “When that is the case, you know the Tories are in the deepest trouble.”
He added: “What we’re witnessing is not only the Conservative Party trashing its own brand but also trashing the economy.
“The new-found Trussonomics says that we cut tax first. It is profoundly unconservative.”
Ross Greer, the Scottish Greens’ finance spokesman, said: “The scale of incompetence we’ve seen from the Prime Minister and her Chancellor is unprecedented. It would be hard to overstate how disastrous their actions have already been.
“In less than a week since their first budget we’ve seen the pound in freefall, the IMF raising concerns and now the Bank of England being forced to intervene.
“Liz Truss and Kwasi Kwarteng can at least limit the damage of their actions if they reverse course right now.”
I don‘t think we’ve had a more serious [economic] situation in our memories NICOLA STURGEON ON THE CURRENT FINANCIAL CRISIS