Chancellor Kwasi Kwarteng announced a swathe of measures to tackle inflation and drive growth on Friday, including scrapping the top rate of income tax, cutting the basic rate to 19p in the pound and scrapping the cap on banker’s bonuses.
But the markets have reacted negatively to the announcements, with sterling falling to its lowest level against the US dollar in history.
The Scottish Government came under pressure from some to follow the tax cutting plans of the UK Government, which Nicola Sturgeon appears determined to withstand.
She hinted on Friday that the Scottish Government would not follow the same route, but on Monday was more steadfast in her opposition.
“We’ll take a sensible approach, which will be in stark contrast to the one we’re seeing from the UK Government,” she told the PA news agency on a visit to Graham’s Family Dairy in Bridge of Allan, near Stirling.
“We have a situation right now where everybody bar the most tribal Tory supporters thinks what the Chancellor has done is morally repugnant, fiscally damaging and reckless.
“And yet somehow, there is an expectation that the Scottish Government should follow suit – that would be absolutely the wrong thing to do.
This government, the UK Government, seems to have no idea what it is doing
“So, we’ll take sensible, careful decisions that are about helping those who need help most.”
Asked for her response to the broader plans laid out by the Chancellor on Friday, the First Minister said: “The mini-budget was a catastrophic disaster that is playing out in real time before our eyes right now.
“The UK economy is in crisis, we’re seeing sterling in freefall, we’re seeing the cost of Government borrowing ratcheting up.
“We saw on Friday from the Chancellor policies that are, in my view, morally abhorrent, racking up borrowing that future generations will have to repay, not to invest in the overall wellbeing of the economy or help the majority, but to make a relatively small number of already rich people even richer – that’s indefensible.”
Ms Sturgeon went on to say that the policies are also proving to be “fiscally reckless”, given the reaction from markets on Monday, predicting a potential increase in interest rates and cost of borrowing and a continuing issue with inflation.
“This Government, the UK Government, seems to have no idea what it is doing – the damage it is doing to the economy overall, and to the living standards of the majority, is deep and very, very serious.”
Worries have been raised about the potential for people to migrate south of the border as a result of the tax cut, but the First Minister said the value of a country doesn’t rest on income tax rates alone.
“The attractiveness of a country is not just about income tax rates, it’s about the health of an economy overall, it’s about the investment in our infrastructure, it’s about the strength of our public services, it’s about the social contract,” she said.
She went on to say that those living in Scotland do not have to pay university tuition, elderly personal care costs or prescription charges.
On Monday, the Treasury announced the Chancellor would outline a “medium-term fiscal plan” on November 23.
A statement from a Treasury spokesman said: “Cabinet ministers will announce further supply-side growth measures in October and early November, including changes to the planning system, business regulations, childcare, immigration, agricultural productivity and digital infrastructure.
“Next month, the Chancellor will, as part of that programme, outline regulatory reforms to ensure the UK’s financial services sector remains globally competitive.
“He will then set out his medium-term fiscal plan on November 23.
“The fiscal plan will set out further details on the government’s fiscal rules, including ensuring that debt falls as a share of GDP in the medium term.”