THE POUND has plunged to an all-time low against the US dollar amid hammered market confidence in the UK Government’s economic strategy - as the First Minister accused the Tories of creating an "economic crisis".

The markets have reacted horrendously after Chancellor Kwasi Kwarteng unveiled the biggest tax cuts in 50 years in England and signalled more were on the way.

Sterling hit its lowest level against the dollar since decimalisation in 1971, falling by more than 4% to just 1.03 dollars in early Asia trading before it regained some ground to about 1.07 dollars early on Monday.

Nicola Sturgeon, who is unlikely to mirror the strategy taken by the UK Government, has warned "it's hard to overstate the scale of the economic crisis caused by Friday's UK Budget".

She added: "While the very richest get tax cuts, ordinary people - already hit by soaring inflation - are about to be hit by rising interest rates.

"The House of Commons should be in emergency session now."

The Euro also hit a fresh 20-year low against the dollar amid recession and energy security fears ahead of what is expected to be a painful winter across Europe as the war in Ukraine shows no sign of ending.

Experts warned the pound’s plunge towards parity with the dollar will send the cost of goods soaring even higher, potentially worsening the cost-of-living crisis, while it also means it will be more expensive for the UK Government to borrow money – of which it is ramping up to offset the cuts.

Shadow chancellor Rachel Reeves accused Chancellor Kwasi Kwarteng and Prime Minister Liz Truss of recklessly gambling with the UK’s finances.

The Labour MP told Times Radio: “Instead of blaming everybody else, the Chancellor and the Prime Minister, instead of behaving like two gamblers in a casino chasing a losing run, they should be mindful of the reaction not just on the financial markets but also of the public.”

She added: “They’re not gambling with their own money, they’re gambling with all our money, and it’s reckless and it’s irresponsible as well as being grossly unfair.”

Mr Kwarteng has previously brushed off questions about the markets’ reaction to his mini-budget – which outlined the biggest programme of tax cuts for 50 years – after it was announced on Friday using more than £70 billion of increased borrowing.

He claimed on Sunday the cuts “favour people right across the income scale” amid accusations they mainly help the rich.

But financial markets continue to be spooked and there are fears the Bank of England may even be forced to step in with an emergency interest rate hike in a bid to steady the pound and rein in inflation fuelled by the tax cuts.

The Bank increased rates by another half percentage point to 2.25% last Thursday, however, financial markets are speculating that it may act with another before its next scheduled meeting in November, which would also impact household mortgage borrowing.

Mr Kwarteng and Ms Truss have defended their growth plans package, despite analysis suggesting the measures, which include abolishing the top rate of income tax for the highest earners, will see only the incomes of the wealthiest households grow while most people will be worse off.

Three days after his mini-budget statement, the Chancellor indicated his announcements were just the beginning of the Government’s agenda designed to revive the UK’s stagnant economy.

Mr Kwarteng and Ms Truss could continue their spree in the New Year with possible further reductions in income tax and the loosening of immigration rules and other regulations.

Downing Street has declined to comment on the dramatic fall in the pound.

The Chancellor is not expected to make a statement or comment on the plummeting pound, Downing Street said.

The Prime Minister’s official spokesman said on Monday: “I think that the Chancellor has made clear that he doesn’t comment on the movements around the market and that goes the same for the prime minister.

“The UK with the second lowest debt-to-GDP ratio in the G7 is investing in its future. That’s through a growth plan while remaining fiscally responsible and committed to driving down debt in the medium term.

“The growth plan, as you know, includes fundamental supply side reforms to deliver higher and sustainable growth for the long term, and that is our focus.”