DOUGLAS Ross has admitted the surge in interest rates in the wake of the Chancellor’s ill-fated mini-budget is “an absolutely huge concern” for mortgage holders like himself.

The Scottish Tory leader also said that Rishi Sunak, who lost the Tory leadership race to Liz Truss, had “predicted a lot of what has happened” in recent days.

Mr Sunak warned repeatedly that Ms Truss’s plans for unfunded tax cuts would add to inflation, forcing the Bank of England to raise interest rates, hurting millions of people.

Since Kwasi Kwarteng announced a series of tax cuts last Friday, the Bank has been forced to intervene in the bond market to buy UK Government debt that was collapsing in value.

The costs of Government borrowing have also shot up, with the financial markets expecting the Bank to raise interest rates from 2.25 per cent now to around 6% next year.

The uncertainty over future rates has seen lenders withdraw thousands of mortgage products from the marketplace, causing some home deals to collapse.

Ms Truss and Mr Kwarteng today defended the mini-budget and refused to reverse its measures, despite an unprecedented plea from the International Monetary Fund to do so.

The Prime Minister largely ignored questions about the turmoil in the financial markets when she appeared on BBC regional radio stations this morning.

However, speaking to the media Holyrood after FMQs, Mr Ross said the UK Government could not ignore what was happening in the markets and must respond to them.

He said: “We can't ignore the reaction in the markets. The Government are not ignoring the response from the markets. It's right that we look at that.”

Asked if he had complete confidence in Liz Truss and the Chancellor, he said: “Yes. I have confidence that the Chancellor and the Prime Minister are doing everything they can to respond to the reaction that we’ve seen from the Bank of England and the markets.”

Asked if Mr Sunak had been right along, Mr Ross said: “We’ve seen what Rishi said during the campaign, and he predicted a lot of what has happened. Clearly there was a difference of opinion between Rishi and Liz over the course of the entire election campaign, and the members supported Liz, and she's taken forward at her plans as Prime Minister.” 

He refused to say if he had voted for Mr Sunak for the leadership.

Asked about people being worried by the financial upheaval, he said: “It's an absolutely huge concern. I'm a mortgage payer, like the vast majority of people here in Scotland and across the UK. That’s a considerable concern.

“I think it is right that in terms of tax deductions that we see as many people, from lower earners, through the tax system, paying less tax, so they have more of their own money to spend in local economies supporting local businesses

“But that is being offset at the moment by, as we see, the increasing interest charges and people are struggling and we've got to do everything we can to support them, support businesses. The biggest single element of the budget announced was over £60billion for energy support. People were calling for that, they needed urgent action.”

After the Chancellor briefed MPs again this morning, Mr Ross said he expected Mr Kwarteng to explain more of his long term thinking, including controlling the deficit.

One of the things that spooked the market was the lack of a detailed report from the Office of Budget Responsibility (OBR) accompanying the mini-budget.

Mr Ross said: “Normally with a full budget, we'd have the OBR report with it. 

“I think it's important that we have that information as quickly as possible to give some assurance to the market. A lot of what was in the mini budget had already been outlined prior to that, and therefore, the markets were aware. 

“Where there are elements they are concerned about - a gap in terms of spending and income and resources - then it's right that the government seeks to provide those reassurances as quickly as possible.

“I think all these things will be looked at very quickly. We’ve got one more week of recess before Westminster returns. We will clearly have statements in the house, either brought forward by the government or the opposition. I expect to have either an urgent question or a statement from the Chancellor as soon as the parliament returns.

Asked how the Chancellor was doing so far, Mr Ross said: “Clearly this is extremely challenging, and many people have made their opinions known on the Chancellor. I want to give the Chancellor and the Prime Minister and the whole Government the opportunity to get out there to ensure that we provide the answers that the market are looking for, but crucially the public, business owners, home owners etc who are worried right now.”