SNP call for Chancellor to return to parliament as Treasury insist Government focused on making UK better off

The SNP has urged the Chancellor to return to parliament after borrowing costs reached their highest levels in 30 years.

SNP Westminster leader claimed the UK Government looked “increasingly clueless and incompetent on the economy”, while the Tories accused Rachel Reeves of having “fled to China”.

Making Britain better off will be “at the forefront of the Chancellor’s mind”, the Treasury has insisted, with Ms Reeves set to meet her counterpart He Lifeng in Beijing on Saturday to discuss trade and investment as well as raising “difficult issues” including the country’s support for Russia’s war in Ukraine.

But the trip has been overshadowed by concerns over a rise in Government borrowing costs after yields on UK bonds surged to their highest level since the 2008 financial crisis, as well as reports that the Chancellor had asked Cabinet colleagues to draft alternative plans to secure economic growth.

Mr Flynn MP said: "The Labour government looks increasingly clueless and incompetent on the economy - as UK borrowing costs soar, growth slumps, prices rise and jobs are cut.

"Voters were promised the Labour Party would fix the economy - but instead they've made it even worse. There is now a very real danger that the UK faces a new cost of living crisis, rising unemployment and years of Westminster austerity cuts as a result of Labour's incompetence.

“There is no escaping the fact that this is the Labour Party’s fault. They boxed themselves into a fiscal straight jacket on tax and shut off any route back to the EU single market - the biggest single roadblock to sustained economic growth. They ignored all the warnings - including over their National Insurance tax hike, and now we are all paying the price.

"We were told driving growth was the central mission of the UK government - but the UK economy is heading in the wrong direction, as growth forecasts are revised down not up, and the Chancellor is left begging Cabinet colleagues for any ideas to get the UK out of this mess.

"The Chancellor must urgently come to parliament and outline what emergency action she will take to reverse the damage caused by the Labour government's Budget and get the economy back on track before the UK reaches crisis point on her watch.

"Millions of Scottish families and small businesses will pay the price if the Labour government continues on this dangerous path to failure."

It came as leading economist Paul Johnson, of the IFS, suggested movements in the markets will put "pressure" on Ms Reeves to deliver a major fiscal event in the spring, despite the Chancellor having committed to just one a year. The pound fell to its lowest level since November on Thursday, while the cost of borrowing has risen sharply.

John Swinney said an emergency budget would be “highly unusual”

Asked by The Scotsman if he was concerned about the speculation over a potential emergency budget at Westminster, First Minister John Swinney said it would be "highly unusual" for April's settlement to be tweaked at this late stage, but raised fears about the impact of the longer-term spending review set to be carried out by the UK government in the spring.

As well as the spending outlook for the next three years, the spending review is also poised to inform Holyrood's capital spending on infrastructure projects over the next five years.

He said: "We could find there could be negative effects on budgetary settlements.

"There are lots of speculative stories about greater spending cuts and emergency Budget - all of which would have an effect on our situation."

Mr Swinney added: "It would be highly unusual for a budget settlement, having been announced by the UK government for 25/26, to be revisited.

"I think the talk is much more likely to be about a tougher spending review, which is three years of our outlook, as a consequence. We will obviously engage substantively on that.

"The spending review discussions have not really commenced yet but we would expect to be involved in those."

Mr Swinney also warned that Scotland "will not be immune from the impact" of the Chancellor's controversial decision to hike employers' national insurance contributions.

Speaking to The Scotsman, he said: "Clearly the United Kingdom government is facing significant challenges, some of which they inherited and some of which they have now created. I have made no secret of the fact that I think the employers' national insurance contributions decision has been a mistake.

"For a government that has pledged to support growth. it is a counter-productive measure to have taken."

The First Minister added: "I argued that we had to increase public expenditure. I set out that I thought that should be done through other taxation measures.

"I would not have recommended it through employers' national insurance contributions because that increases the cost of employment and as a consequence, that makes growth less likely. I'm worried about economic prospects."

A Scottish Government spokesperson added: “Rising gilt yields are a concern as they increase the costs of the UK Government’s borrowing. Scottish Ministers would urge the UK Government not to pass any resulting costs on to Scotland, as it has done with the increase to employer National Insurance Contributions.

“It is important that the Chancellor engages with the Scottish Government ahead of any statements or interventions on this issue.”

Ahead of her meeting with Mr He, the Chancellor said her visit was part of efforts to build a long-term economic relationship with China that “works in the national interest”.

“Growing the economy and raising living standards is front and centre of this government’s plan for change,” Ms Reeves said.

“That growth must be secure, resilient, and built on stable foundations, including through careful pragmatic cooperation with international partners.

“By finding common ground on trade and investment while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”

The Treasury added that “making working people across Britain secure and better off” would be “at the forefront of the Chancellor’s mind while in Beijing this weekend”.

The Chancellor will be joined by Bank of England governor Andrew Bailey, chief executive of the Financial Conduct Authority Nikhil Rathi and senior representatives from some of Britain’s biggest financial services firms on the trip.

While in the country’s capital, she will visit British bike brand Brompton’s flagship store, which relies heavily on exports to China, before heading to Shanghai for talks with representatives across British and Chinese businesses.

The UK Government has said its “reset” of relations with Beijing comes with the “firm recognition” that the two countries “will not, and do not, always agree”.