UK Politics:Kwarteng sacked as chancellor by PM Truss

– reportsBY:JACK BARNETT

Kwasi Kwarteng has today been axed as chancellor by prime minister Liz Truss, according to the BBC and Sky News.

Kwarteng today cut short his trip to Washington to attend International Monetary Fund meetings to fly back to London for emergency talks with Truss about another U-turn on the mini budget.

He has been in Number 11 for 38 days after being appointed by Truss following her Tory leadership race victory.

Truss is rumoured to be mulling abandoning key parts of the mini budget, which was characterised as the government’s blueprint to turbo charge UK economic growth. Truss is on course to ditch the corporation tax hike reversal.

Last week, Kwarteng was forced to roll back plans to scrap the top 45p rate of income tax. A government source told The Times corporation tax is unlikely to be raised to 25 per cent, meaning it is likely to be lifted to somewhere in the twenties. 

The six percentage point rise was initially tabled by former chancellor Rishi Sunak in the March 2021 budget. Markets have been roiled by the government’s £43bn worth of unfunded tax and the two year £2,500 typical energy bill freeze ramping up UK borrowing.

In the aftermath of the mini budget on 23 September, yields on UK gilts have climbed to their highest level in over 20 years and the pound hit a record low against the US dollar.

Yields and the pound have since recovered.Rates on the 30-year UK gilt slid today on rumours of a looming U-turn. Yields and prices move inversely. Kwarteng had been set to outline his plans to put the public finances on a more sustainable path on 31 October.

The Institute for Fiscal Studies estimates the government needs to plug a £62bn hole in the public finances.

The prime minister will hold a press conference later today. Shadow chancellor and Labour MP Rachel Reeves said: “A humiliating u-turn is necessary – but the real damage has already been done to millions of ordinary people now paying much higher mortgages and struggling to make ends meet.”

“This is a Tory crisis: made in Downing Street. They have plunged our economy into chaos and crisis with Truss’ discredited trickle down approach. It won’t be forgiven or forgotten.”

“Only a Labour government has the credibility, authority and plan to fix things.”

Source: BBC News