Mon, 20 May 2024

Newsletter sign-up

Subscribe now
The House Live All
Harnessing North East Devolution Partner content
By Port of Tyne
Construction sector could cut prison leaver unemployment with right support Partner content
How the next Government can start planning for growth Partner content
Press releases

Opposition Parties Say Parliament Must Be Recalled After Major Central Bank Intervention

4 min read

MPs should be recalled to Parliament to discuss sliding markets, opposition parties have said, after the Bank of England warned of a “material risk to UK financial stability”.

Parliament is currently in recess until 11 October while parties hold their annual conferences, with the Conservatives due to meet in Birmingham this weekend. 

The bank this morning launched an emergency temporary bond-buying programme to try and inject some calm following the markets’ reactions to last week’s “mini-Budget” in which Chancellor Kwasi Kwarteng announced sweeping tax cuts. 

Labour leader Keir Starmer insisted MPs should be brought back to London and called on the government to abandon the controversial fiscal plans "before any more damage is done". 

Speaking to reporters in Liverpool, where the party has been holding it's annual autumn conference, he said: "The move by the Bank of England is very serious.

"And I think many people will now be extremely worried about their mortgage, about prices going up, and now about their pensions.

"The Government has clearly lost control of the economy."

He added: "What the Government needs to do now is recall Parliament and abandon this budget before any more damage is done."

Shadow chancellor Rachel Reeves has called on Chancellor Kwasi Kwarteng to make an "urgent statement on how he is going to fix the crisis that he has made". 

Kwarteng’s fiscal event last week triggered a fall in the pound, and the Bank of England has taken the unusual step of buying government debt  to “restore orderly market conditions” and committed to purchasing the bonds on “whatever scale is necessary” for stability. 

The Liberal Democrats have said that Prime Minister Liz Truss has “24 hours to fix this economic disaster” and asked her to recall to reassure markets and homeowners, while the SNP have also called for “immediate” action. 

Lib Dem leader Ed Davey said this morning that the country cannot wait until the proposed November statement for an update. 

“Liz Truss has 24 hours to fix this economic disaster and prevent people losing their homes,” he said. 

“Now is the time for the Prime Minister to recall Parliament to reassure not just the financial markets, but also British homeowners at risk of higher mortgage costs. 

“Truss and Kwarteng must come forward and spell out how they will repair the damage from their shambolic budget.

“Every hour the Prime Minister and Chancellor hide from this economic nightmare increases the chances of interest rates spiralling out of control and people losing their homes.” 

SNP Westminster leader Ian Blackford also called for the recall of parliament and described last Friday’s interventions as “taking the UK to the brink of catastrophe”. 

“The Chancellor must come out of hiding and act now to reverse the damage he has caused - and avoid the impending threat of an unprecedented UK economic crash," he said. 

"Parliament must be recalled immediately and an emergency statement must be brought forward within days, not weeks.”

A Treasury spokesperson said this morning: “The Bank of England, in line with its financial stability objective, carefully monitors financial markets and any potential risk to the flow of credit to the real economy, and subsequent effects on UK households and businesses.

"Global financial markets have seen significant volatility in recent days. The Bank has identified a risk from recent dysfunction in gilt markets, so the Bank will temporarily carry out purchases of long-dated UK government bonds from today (28 September) in order to restore orderly market conditions. These purchases will be strictly time limited, and completed in the next two weeks. To enable the Bank to conduct this financial stability intervention, this operation has been fully indemnified by HM Treasury.

“The Chancellor is committed to the Bank of England’s independence. The government will continue to work closely with the Bank in support of its financial stability and inflation objectives.”

PoliticsHome Newsletters

PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe

Read the most recent article written by Adam Payne and Caitlin Doherty - Rishi Sunak Facing Struggle To Get Rwanda Legislation Past Lords


Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now