Labour is “on its way” to forming government and is now the party of “economic responsibility”, shadow chancellor Rachel Reeves has said.
Reeves said in her Labour party conference speech today that “it’s time for a government that is on your side – that government is a Labour government”.
It comes as the Bank of England will intervene today to stem the pound’s sharp fall against the US dollar, according to reports by Sky News.
Labour has pledged during its party conference to reverse the government’s decision to cut the top rate of Income Tax from 45p to 40p.
Reeves has also promised to create a new £8bn sovereign wealth fund if Labour wins the next election, which would invest in British green energy manufacturing.
“Last year I told this conference I was more than happy to take on the Tories when it came to economic competence because I know that we can win,” she said.
“I am now wondering whether they even plan to show up for the fight.”
She attacked Prime Minister Liz Truss and chancellor Kwasi Kwarteng for last week announcing £45bn of tax, which will be funded by new borrowing.
The move has led to Sterling to fall to a 40-year-low against the US dollar and to government gilt yields rising – both of which make the government’s debt repayment costs more expensive.
She also today pledged to increase the UK’s national living wage and to reimpse the ban on fracking.
“On day one as chancellor I will write to the Low Pay Commission with a simple instruction, that the minimum wage will be set at a level that reflects the real cost of living,” she said.
Earlier today, City economists said the Bank needs to hike interest rates by the greatest amount in its independence this week in an emergency meeting to drag the pound from its record low against the greenback.
Economists at consultancy Capital Economics said in an emergency note to clients this morning that Bank governor Andrew Bailey and co should lift borrowing costs as much as 150 basis points to stem the pound’s losses.
“Tough talk supported by a large and immediate interest rate hike [would show] the markets the Bank is writing the script not responding to it,” Paul Dales, chief UK economist at Capital Economics, said.
“The UK will face higher interest rates, continuing concerns about long-term fiscal sustainability and the gradual realisation that period of tighter fiscal policy will be needed further down the line. And all of that will weigh on the economy.”