PRESSURE is mounting on the Tories to reverse their “disastrous” Budget after the Bank of England was forced to make another emergency intervention to calm the markets today.

Amid warnings of a “material risk to UK financial stability,” the central bank stepped in for a second day running to buy more government bonds in a bid to prevent a sell-off that could put some pension funds at risk of collapse. 

The move has been made as a result of “further significant repricing of UK government debt” in one pension-linked market, the bank said, prompting it to extend its operations to buy up index gilts, a government bond with interest payments in line with inflation. 

This is the third time Threadneedle Street has had to step in since Chancellor Kwasi Kwarteng’s “bankers’ Budget” announcement plunged the economy into crisis last month.

The announcement of uncosted tax cuts prompted a rise in gilt yields, the return on the capital invested in buying government bonds. 

This in turn has pushed up government borrowing costs as rising yields mean government bonds are less in demand by investors. 

Labour said the latest intervention by the central bank demonstrates the need to urgently reverse the “disastrous” Budget of uncosted tax cuts which it said has already caused “untold damage” to the public and businesses. 

It came as Mr Kwarteng’s mini-Budget was dealt another blow by the International Monetary Fund (IMF) today, which warned the sweeping tax cuts and energy support plans would “complicate the fight” against the cost-of-living crisis.

The Washington-based organisation admitted that the tax cuts would lift economic growth in the short-term, but warned that in Britain “for many people 2023 will feel like a recession.” 

Mr Kwarteng continued to defend the plans despite the ongoing intervention from the Bank of England, telling MPs in the Commons that his “growth plans” would enable more money to be put in people’s pockets and raise everyone’s living standards. 

But shadow chancellor Rachel Reeves accused Mr Kwarteng of being in a “dangerous state of denial.”

“No other government is sabotaging their own country’s economic credibility as the UK Conservative government is,” she told MPs.
 
“Are the Chancellor and the Prime Minister the last people left on Earth who actually think that their plans is working?”

Ms Reeves added: “Will the Chancellor now put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the Budget.”

Fears that the mini-Budget could usher in a new wave of austerity were heightened after the Institute for Fiscal Studies think tank warned that the uncosted tax breaks would require spending cuts of £60 billion each year over five years. 

The IMF said Mr Kwarteng would need to find “big and painful” cuts to public services in order to put the country’s finances on a sustainable path. 

The Chancellor’s Budget proposals have already triggered a temporary depreciation in the value of the pound and pushed up mortgage repayments as well as government borrowing. 

Trade unions have described the measures as “Robin Hood in reverse.”