Labour has accused Liz Truss’s government of acting like “gamblers in a casino” after the pound fell to its lowest level against the dollar since decimalisation, following the chancellor’s mini-budget. Shadow chancellor Rachel Reeves said the government’s economic plans were “reckless, irresponsible and unfair”, and warned that the cost of servicing debt would rise at the expense of public services.
The pound dropped to $1.0327 on Monday, a record low, before recovering slightly to around $1.07, but remained about 7% lower than before Friday’s announcement of £45bn of largely unfunded tax cuts. Markets were spooked by the plans, with economists predicting the Bank of England might need to raise interest rates urgently, and the cost of government borrowing soaring.
Reeves told Times Radio: “Instead of behaving like two gamblers in a casino chasing a losing run, the chancellor and the prime minister should be mindful of the reaction not just on the financial markets but also of the public. They are not gambling with their own money; they are gambling with all our money.” She criticised the “grossly unfair” tax cuts that predominantly benefited the wealthy and said she was “incredibly worried” about the market reaction.
The Liberal Democrats called for the recall of parliament from the conference recess to address the crisis. Work and pensions secretary Chloe Smith, speaking for the government, refused to comment on market movements, insisting the government was focused on delivering growth. Reeves also blamed chancellor Kwasi Kwarteng for exacerbating the crisis by promising further tax cuts in a Sunday interview, saying “he fanned the flames”.
Labour pledged to fund its alternative plans by reinstating the 45p top rate of income tax and extending the windfall tax on energy firms, while accepting some borrowing was merited in the current emergency. “In the round, we would not be making the increases in borrowing that the government is making,” Reeves said.
