ALISTER Jack claimed the pound was not “tanking” but the BBC was simply taking things “too far” in a car crash interview on Friday morning.
The Scottish Secretary was appearing on Good Morning Scotland when he was quizzed about the financial crisis which followed his government’s “mini-budget” last week.
Chancellor Kwasi Kwarteng announced a swingeing £45 billion package of tax cuts, largely benefitting the rich and funded by increased government borrowing, which led to the collapse of the pound to record lows against the US dollar.
The International Monetary Fund issued an extraordinary intervention urging the Tory government to change course, before the Bank of England was forced to launch a £65bn emergency bond-buying plan to avoid pension funds collapsing.
However, Jack dismissed the economic problems, describing the tax cuts as “small”.
He further suggested that “anyone paying any attention” to the Tory leadership race over the summer should have anticipated what would happen.
In a confrontational interview with the BBC Scotland radio hosts, he further took issue with the pound being described as “tanking”.
“This is the BBC taking it too far,” he said. “The pound has recovered.”
The value of the sterling has risen to $1.12, up from historic lows of $1.03 on Monday but still shy of the $1.13 before Kwarteng’s (above) announcement. The pound’s value is still far below the $1.35 price which it had at the beginning of 2022.
The recovery of the pound was buoyed by the intervention from the Bank of England and the increase in the interest rate, which was put up by 0.5 percentage points to 2.25% last week.
Experts are predicting that the interest rate could go as high as 6%, which could in turn impact on people’s mortgage payments. MoneySavingExpert founder Martin Lewis said that scenario would be “catastrophic for mortgage holders”, highlighting the costs it could add to monthly bills.
“There is a ticking timebomb going on in mortgages if UK interest rates follow what the market is predicting,” Lewis said.
Asked about the effect of the Tories’ “mini-budget” on the mortgage market, Jack was dismissive.
“We were going to see mortgage costs go up and interest rates go up,” he said. “They already have been going up to try and suppress inflation, and that inflation has been brought forward by [Vladimir] Putin’s illegal war, we know that.
“It’s not different to the yen, the euro, the pound, all bar the [US] dollar, all currencies around the world are under pressure on this.”
Confronted over the impact of Tory tax cuts on the economy, Jack said: “When you say ‘huge shock’, over the summer she [Truss] was very clear that she believed that her strategy was to reduce taxes.
“She and Rishi Sunak argued that out over the summer … she said she believed the strategy was to be more of a sort of ‘Asian tiger economy’ strategy, where you keep your higher spending but you grow your economy, and she said to do that she would be cutting taxes.
“To anyone paying any attention to that leadership contest it was plain as day what was going to happen.”
It shouldn’t come as a shock to anybody , Liz Truss was very clear on what she planned to do - Alister Jack shows up at BBC Scotland one week after the event to explain we should’ve expected the economic fallout from the unelected PM’s budget. #bbcgms pic.twitter.com/rsRJjdg1sA
— Phantom Power (@PhantomPower14) September 30, 2022
The Prime Minister and Chancellor met with the Office for Budget Responsibility (OBR) on Friday, after it was revealed that they had dismissed an offer of an economic forecast to accompany the “mini-budget”.
Jack said the Government had to act quickly to deal with rising energy bills and could not wait for an OBR update, which he said could take between eight and 12 weeks.
The Scottish Secretary – reappointed to his post by Truss after serving under Boris Johnson – was also unmoved by recent polling showing a massive 33-point Labour lead.
A YouGov poll for the Times released on Thursday suggested Sir Keir Starmer’s party held a 33-point lead over the Tories, with 54% of the 1712 respondents backing Labour.
Jack said: “On opinion polls, I always give the same answer, which is the opinion poll that matters is when people go to the polls and cast their vote.”
