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5 major problems facing Nicola Sturgeon in wake of Tory budget chaos

First minister Nicola Sturgeon.
Nicola Sturgeon's goverments faces major challenges.

Nicola Sturgeon has warned Scotland will suffer from the UK’s “rapidly deteriorating” economy, days after the Chancellor unleashed economic turmoil in last Friday’s “mini-budget”.

The first minister insisted Tory financial plans will leave more struggling households in poverty as she was quizzed at Holyrood on her own party’s plan for government over the next year.

Here are five major challenges facing the SNP in the months to come as they try to cope with the cost-of-living crisis in the midst of economic chaos.

1 – How will the economic fallout from the mini-budget hit Scotland?

New Tory chancellor Kwasi Kwarteng’s mini-budget on Friday sparked turmoil in the markets as he promised tax cuts for the richest.

The first minister described an intervention from the Bank of England over the crisis as “extraordinary” and claimed the UK Government must ditch its controversial pledges.

New UK chancellor Kwasi Kwarteng.

Ms Sturgeon, in parliament on Wednesday, said Mr Kwarteng’s mini-budget would drive more families into poverty and warned rising interest rates would increase “financial stress”.

Measures proposed by the treasury in England include cutting the top rate of tax to 40%, slashing the basic rate of income tax to 19% and a reverse to April’s National Insurance rise.

Speaking to the parliament’s Conveners’ Group, Ms Sturgeon said: “It is quite hard to overstate the impact Friday’s budget will have on poverty, inequality and the financial stress that millions of people are going to be living under.”

The Scottish Government is already counting the cost of a £1.7 billion real-terms cut in its budget due to soaring inflation this year, she added.

Mr Swinney said the SNP does not intend to replicate Tory tax cuts when he sets out an emergency budget in October, despite senior Tories warning higher rates in Scotland could result in some taxpayers moving south.

2 – Can the Scottish Government offer more cost-of-living support?

The widespread controversy over the chancellor’s budget comes in the wake of rising energy costs already hitting households across Scotland.

While measures from the UK Government will cap price increases, many families are already struggling.

Heating prices in Scotland have already risen.

Conservatives asked Ms Sturgeon if more financial packages would be on offer to help people in need north of the border.

Ms Sturgeon said measures introduced in her party’s programme for government – including a temporary rent freeze – would reduce existing pressures.

However, she insisted Westminster must do more.

3 – How will the rent freeze be managed?

The Scottish Government’s planned rent freeze is one of the key measures aimed at stopping the cost-of-living from escalating further.

Under the temporary measures, landlords won’t be able to increase rental prices for six months and will be barred from evicting tenants.

But the policy could be complicated by the unfolding economic chaos at Westminster which is expected to result in increased interest rates.

Homes to rent signs
A rent freeze is expected to come into force soon.

If that happens, property owners – including landlords banned from upping rents – would face increased monthly mortgage costs.

Some furious homeowners threatened to take their properties off the market when the rent freeze was announced.

Defending the policy, Ms Sturgeon said it was not intended to be permanent and added it was “really important” to keep prices down for tenants.

If interest rates don’t eventually settle, some tenants may want the emergency measure extended to stop landlords from passing on increased costs to renters.

4 – How will the government help struggling rural communities?

Nowhere in Scotland will escape unscathed from the cost-of-living crisis – but rural areas could be in for a particularly tough winter.

Households living in Scotland’s most rural local authorities face the highest levels of fuel poverty in the UK.

Speaking to MSPs, Ms Sturgeon admitted cost-of-living pressures can have a “unique effect” in less populated towns and villages.

The first minister insisted her government would be “mindful” of the struggles being faced by rural Scots in the coming months when planning out support – but offered no immediate new solutions.

5 – How can the NHS cope over winter?

Scotland’s NHS is braced for a difficult winter.

Patients regularly face record waiting times for A&E appointments under the SNP Government.

Health budgets will be further stretched soon due to increased costs for energy in hospitals.

An NHS Grampian official was among those sounding the alarm in Holyrood one day before Ms Sturgeon appeared before MSPs.

Audit Scotland says the NHS is under "severe pressure".
The NHS faces a difficult winter.

Ms Sturgeon admitted escalating prices would “clearly affect” health boards across the country.

The first minister said she fears “further spending cuts” from the UK Government which would hit Scotland’s budgets harder.