Labour says financial turmoil is ‘just the tip of the iceberg’

<span>Photograph: Ian Forsyth/Getty Images</span>
Photograph: Ian Forsyth/Getty Images

The shadow health secretary, Wes Streeting, has said the “cavalry is coming” with the Labour party as he warned that the current turmoil on financial markets was “just the tip of the iceberg”.

Streeting criticised last week’s mini-budget from the chancellor, Kwasi Kwarteng, as a “reckless gamble”.

His remarks came as some mortgage lenders – including Halifax, the UK’s biggest home loan provider – temporarily withdrew their products as financial markets predicted the Bank would need to raise interest rates from 2.25% to 6%.

Kwarteng’s so-called growth plan on Friday sparked a record-breaking plunge in the value of the pound as jittery investors ditched sterling amid fears over the trajectory for the UK economy.

Streeting told Sky News: “All of us are frankly still recovering from our jaws hitting the floors last week with that budget from Kwasi Kwarteng. And the real-world consequences we’re seeing overnight, the withdrawal of mortgage products, tell us about the extent to which our own chancellor in this country has frightened the markets.

“This is just the tip of the iceberg. If interest rates go up in the way that some people are predicting, that’s going to be huge additional costs to people with mortgages. And what was the chancellor’s answer yesterday? ‘Don’t worry folks, in November I’m going to come up with some new fiscal rules – ie, I’ve ignored all the ones I’ve already got and I’m rewriting the rules and making them up as I go along.’ This isn’t serious leadership – it’s a reckless gamble.”

He added: “The calvary is coming with Labour. We’ve got serious people, with a serious plan that would make an enormous difference to families right across the country and to businesses, who are the backbone of our economy and will be the bedrock of economic growth.”

The pound steadied in early trading in Asian markets on Tuesday as it recovered ground slightly from the record low of 1.0327 against the US dollar it had hit early on Monday after traders were spooked by the government’s economic plans.

Sterling sat at about $1.08 by 7am on Tuesday, but economists have said it could still fall to parity with the dollar this year for the first time.

The Treasury moved to settle the markets with the promise of a budget next spring as sterling tumbled to its lowest level against the dollar for at least half a century on Monday. Meanwhile, the Bank of England said it “will not hesitate” to raise interest rates to prop up the value of sterling.

The senior Tory MP Huw Merriman, who backed the former chancellor Rishi Sunak for Conservative leader, said Liz Truss may be losing voters “with policies we warned against”, as a YouGov survey put Labour 17 points ahead, the party’s greatest lead since the firm started polling in 2001.