Nicola Sturgeon calls for 'emergency session' after blasting looming 'economic crisis'

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Nicola Sturgeon has called for the House of Commons to commence an “emergency session” after the fallout from Kwasi Kwarteng’s controversial mini-Budget last week. The Chancellor unveiled plans to tackle inflation and drive growth last Friday, including cutting the basic rate to 19p in the pound, and scrapping the top rate of income tax and the cap on banker’s bonuses.

Ms Sturgeon highlighted the disproportionate effects of the measures, pointing to rising interest rates as another issue now facing “ordinary people”.

The SNP boss said: “It’s hard to overstate the scale of the economic crisis caused by Friday’s UK budget. While the very richest get tax cuts, ordinary people – already hit by soaring inflation – are about to be hit by rising interest rates.

“The House of Commons should be in emergency session now.”

Ms Sturgeon was responding to analysis by Sky News’ economics editor Ed Conway, who claimed that while interest rates, which are now expected to rise significantly, may seem low when compared to the 11.3 percent average of 1979, deeper analysis reveals that they could prove devastating for households. The interest rate was increased by 0.5 percent last Thursday to 2.25 percent – and is projected to hit 4.75 percent next year, in reaction to soaring inflation.

This figure is a fraction of previous interest rate peaks during times of economic turbulence, prompting some to claim that its impact on mortgage payments will not be as severe. However, according to housing analyst Neal Hudson, we should adjust for the fact that people were less indebted and had higher comparative incomes to pay their bills in previous times of high interest rates – using as his example the 11.3 percent interest rate of 1979.

With this in mind, 1979’s rate is actually equivalent to around 2.1 percent today, in terms of the burden it places on household budgets. Therefore, Mr Conway claims, the increasing interest rates are a “big deal”, adding: “I am not sure the gravity of this is entirely appreciated in Westminster.”

As well as the impact on interest rates of a growth-focused economic strategy, markets have already reacted negatively to the mini-Budget, with the British pound falling to its lowest level against the US dollar in history. Ms Sturgeon has been unrelenting in her criticism of the strategy – but is facing pressure to adopt them herself.

She said: “The super wealthy laughing all the way to the actual bank ([though] I suspect many of them will also be appalled by the moral bankruptcy of the Tories) while increasing numbers of the rest relying on food banks – all thanks to the incompetence and recklessness of this failed UK Government”.

However, the Chartered Institute of Taxation (CIOT) highlighted the scale of the divergence between the Scottish and UK tax regimes if Ms Sturgeon does not make changes to match the new scheme.

READ MORE: ‘Taking the Mickey out of us!’ Gary Neville blasts Tories’ tax policy [REVEAL]

Sean Cockburn, chair of its Scottish technical committee, said: “We won’t know how the Scottish Government intends to respond until later this year so, absent this detail, it raises the prospect that all Scottish taxpayers earning more than £14,732 will now pay more income tax compared to taxpayers in the rest of the UK. As an illustration, someone in Scotland earning £27,850 would have paid the same amount of tax as someone living in the rest of the UK this year. The changes announced by the Chancellor mean that from next year, they would pay £152.80 more.

“The abolition of the additional rate tax raises the prospect of significant income tax divergence for taxpayers with income above £150,000. In Scotland, the ‘top’ rate of tax – as it’s called – is charged at 46p. Someone earning £200,000 next year would pay £6,045.80 more in income tax compared with someone in the rest of the UK.”

But Ms Sturgeon has refused these calls, telling the PA news agency: “We’ll take a sensible approach, which will be in stark contrast to the one we’re seeing from the UK Government. We have a situation right now where everybody bar the most tribal Tory supporters thinks what the Chancellor has done is morally repugnant, fiscally damaging and reckless.

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“And yet somehow, there is an expectation that the Scottish Government should follow suit – that would be absolutely the wrong thing to do. So, we’ll take sensible, careful decisions that are about helping those who need help most.”

She added: “The attractiveness of a country is not just about income tax rates, it’s about the health of an economy overall, it’s about the investment in our infrastructure, it’s about the strength of our public services, it’s about the social contract.”

Scottish secretary Alister Jack insisted that the UK Government’s plan will support households and businesses in Scotland.

He said: “The chancellor has set out an ambitious package of measures which will cut taxes and drive growth right across the UK. A strong economy is the best way to tackle the cost of living challenges we are all facing due to Russia’s invasion of Ukraine.

“Our Plan for Growth will support households and businesses in Scotland, while driving economic growth to deliver jobs, investment and prosperity. The UK Government is delivering for the people of Scotland when it really matters.”



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