The government of Britain’s new Prime Minister Liz Truss came under pressure on Monday after the pound hit a record low against the dollar following last week’s huge tax cut budget.

The main opposition party, Labor, has berated Truss for massive spending plans, which some economists warn could fuel inflation further.

Labour’s finance spokeswoman Rachel Reeves described the situation as a “national emergency” and likened Truss and her Treasury Chancellor Kwasi Kwarteng to “two desperate gamblers in a casino chasing defeat”.

“The message from financial markets was clear on Friday and this morning that message is even clearer: sterling is down. That means higher prices as import costs increase,” she said.

“The cost of government borrowing has increased. That means more taxpayer money will go toward paying interest on our national debt.

“And that in turn means the cost of borrowing for working people is going to go up now with higher mortgage repayments,” she said at Labor’s annual conference in Liverpool, north-west England.

The UK faces a cost of living crisis with rising energy prices coupled with inflation and stagnant wages.

Kwarteng was appointed Treasury Secretary by Truss earlier this month after she took office after a leadership battle to replace Boris Johnson as leader of the ruling Conservative Party.

On Friday, Kwarteng unveiled a multi-billion pound package to support households and businesses.

He also cut taxes and put forward a plan to lower the lowest income tax rate and lower the highest from 45 percent to 40 percent to boost the economy.

But investors were startled by the massive amount of credit likely to be needed for the package, which critics said would benefit the rich far more than the poorest, who have been hit by the cost-of-living crisis.

The cost of the energy support measures alone has been calculated at £60 billion ($65 billion) for just six months.

However, economists put the total tax package at between £100 billion and £200 billion.

The pound hit an all-time low of $1.0350 on Monday before regaining some ground to stand at $1.0728 by 1115 GMT.

The pound had already suffered a series of 37-year lows against the greenback this month on recession fears in the UK, fueled by high inflation.

Economist Nouriel Roubini, known for his pessimistic forecasts and foreseeing the subprime crisis, said on Twitter he believes Britain is going “back to the 1970s”.

“Stagflation and eventually the need to ask for an IMF (International Monetary Fund) bailout… Truss and her cabinet are clueless,” he said.

The Bank of England (BoE), which raised interest rates by 0.50 percentage point to 2.25% on Thursday, may need an urgent meeting to raise interest rates again.

Markets now believe the rate could rise 2 percentage points by November when the next meeting is scheduled.

Without intervention this week, the pound could soon fall below par with the dollar, warned Lee Hardman, an analyst at MUFG, Japan’s largest bank.

Tensions between the Bank of England and the Treasury are now “palpable,” added Hargreaves Lansdown analyst Susannah Streeter, as central bank officials want to limit inflation by weakening demand and political leaders want to boost it .

Sky News, citing unnamed sources, said the Bank of England would issue a statement.

While inflation in the UK hit 9.9 percent – the highest in the G7 – the central bank also estimated the country had entered a recession in the third quarter.

The pound isn’t the only currency struggling against the dollar: year-to-date the yen is down 20 percent while the euro is down 15 percent.

During the pound’s previous historic low in 1985, several major countries, including the United States, had signed the Plaza Accord, which aimed to voluntarily devalue the greenback.

“Are we getting closer to a ‘Plaza moment’?” said John Velis, an analyst at BNY Mellon.

“The real USD exchange rate is as high now as it was then, but the spirit of cooperation does not yet seem to exist in the world’s major economies,” he said.