KWASI Kwarteng's mini-budget has left the economy in a "mess, an absolute mess, a total mess," John Swinney has told MSPs.
The Deputy First Minister said he believed the Tories would have no choice but to reverse the abolition of the top rate of tax for high earners.
He also said the decisions taken by Chancellor last week - had left the Scottish Government’s budget under “financial strain and pressure” like never before.
The veteran politician told Holyrood’s social justice and social security committee that the crash of 2008 and the austerity of the last decade were “nothing compared to what we are now wrestling with.”
His comments came as Prime Minister Liz Truss attempted to defend last week’s mini-budget, despite the crashing sound and markets reacting unfavourably to the tax cuts and increased borrowing.
She insisted the decision was the “right plan.”
Wednesday saw the the International Monetary Fund calling for a U-turn and the Bank of England forced to launch an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
As Ms Truss took to the airwaves to speak to a host of local radio stations ahead of the Tory party conference, the FTSE 100 Index in London fell by more than 2%.
Asked about the turmoil, Mr Swinney - who is covering the maternity leave of Finance Secretary Kate Forbes, said: “I have never seen financial strain and pressure like I am seeing just now, and I’m wrestling with.”
He added: “I don’t use those words lightly. I managed through the financial crash, I managed through years of austerity under George Osborne and Danny Alexander.
“I left the finance brief in 2016 thinking that we had perhaps managed to mitigate the worst of austerity and that was as nothing compared to what we are now wrestling with.”
Mr Swinney went on to say that the Scottish Government was finding it “ever more difficult” to pursue its goals due to financial decisions being made at Westminster.
“I actually wouldn’t accuse [the Chancellor’s mini-budget] of being Conservative, there’s certain protections of core values that are associated with conservatism and I don’t recognise that in the financial statement from last Friday,” Mr Swinney added.
The Deputy First Minister went on to tell another Holyrood committee he did not believe the UK Government’s position on tax would hold.
“If the UK financial system is going to collapse, they will have to change it,” he told the Covid-19 Recovery Committee.
“It is a mess this morning, an absolute mess, a total mess. I’ve never seen anything like it in my life.
“So how that will prevail I have no idea.
“Why is that happening? It’s because the markets don’t believe the UK any longer believes in fiscal sustainability.
“If the UK Government wants to prove to the markets that the UK Government still believes in fiscal sustainability, and it wants to protect that tax position it set out last Friday, its only got one place to go – reducing spending.”
Yesterday, Mr Swinney delayed his emergency budget until the end of next month.
He had previously promised to respond to Mr Kwarteng’s mini-budget within a fortnight.
However, it will now not happen until after Parliament's October recess.
Mr Swunney has already said he will need to make “hard choices” on top of £500m of cuts already announced.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel