Sir Keir Starmer has warned that the markets are spooked by “chaos” in Westminster as reports suggested the Chancellor is considering up to £20 billion of tax hikes in the highly anticipated Halloween budget.
The Labour leader also urged disillusioned Tory MPs to put the interests of the British people first, as he warned the “psychodrama” in their party is “not a game” for people struggling to make ends meet.
Sir Keir told the Sunday Times that Labour will be “the party of sound money”, claiming there are investors with “huge amounts” of cash that do not have confidence in the “shambolic” Conservatives.
The newspaper said he pointed to evidence suggesting the yield on Britain’s government bonds rose sharply after the news that Boris Johnson was returning to the UK to take soundings on another shot at No 10.
It comes as reports suggest Jeremy Hunt could target high earners in his medium-term fiscal plan in a bid to address an estimated £40 billion black hole in public finances.
The Chancellor is said to be looking at raising as much as £20 billion through boosting taxation, possibly including tightening the capital gains regime.
He may also reintroduce green levies on energy bills, according to the Sunday Telegraph, while savings could be found through scrapping the plan to raise defence spending to 3% of GDP.
Sir Keir told the Sunday Times: “The markets are now reacting to yet more uncertainty that is a direct result of this Tory Government.
“That kamikaze mini-budget isn’t just going to be a footnote in a history book. People are paying the price for that: if your mortgage has gone up, if you’re not on a fixed mortgage, you are now going to have to pay an extra how many hundred pounds a month.
“This has cost the public hugely and I’ll tell you what will stabilise the markets, it is an incoming Labour government, with Rachel Reeves as the chancellor, with absolutely clear fiscal rules.”
He argued the risk lies with “carrying on with this chaos” rather than changing to a Labour administration.
“I think there’s this strong sense now that we need a general election and that the public can’t be locked out of this while the Tories carry on with this circus,” he added.
In a message to disaffected Tory MPs, as veteran backbencher Sir Roger Gale warned a Johnson return prompt a wave of resignations, the Labour leader said: “Country first, party second.
“All those that are going to literally go along with this chaos, rather than allowing us to transition to a stable Labour government, are putting party first, not country first, and that’s the wrong way around.
“We all have a duty to reduce the risk and that is with a general election.
“There’s great interest in this psychodrama but for people who are struggling to pay their bills, people who’ve got mortgages that are now higher than they would have been, people who need the NHS, this isn’t a game.
“And the more this goes on, it is working people, it is the public, who are damaged by this.”
Sir Keir also said Labour would “restore respect” for the Office for Budget Responsibility and the Bank of England.
“We need a serious, credible Labour government that will be the party of sound money and that is the single most likely thing to settle the market completely,” he said.
“The markets aren’t just some abstract chart that we look at… there are investors with huge amounts of money who don’t have confidence in what this chaotic, shambolic party are doing.”