UK Treasury chief quits as PM plans U-turn

Sky News and the BBC reported that Kwasi Kwarteng had been ousted, but it was unclear whether he had been sacked or resigned.

It comes after a month of work – and three weeks after he announced a tax cut ‘mini budget’ that sent the pound plunging to record lows against the dollar.

On Thursday, Kwarteng denied he was about to lose his job, saying “I’m not going anywhere”.

Truss is scheduled to hold a press conference later Friday. She is under intense pressure to remove some of the 43 billion pounds ($48 billion) of unfunded tax cuts that have rattled financial markets and led the Bank of England to intervene to prevent a wider economic crisis.

Senior Conservative Party officials were publicly advising the government to act. The pound rose 1.7% against the dollar on Thursday and bond markets stabilized as Truss and Kwarteng, whose official title is Chancellor of the Exchequer, revise their economic growth plan.

Truss, a free market libertarian, came to power last month pledging to cut taxes to spur growth. But his ability to keep this commitment is now in doubt.

Analysts suggest the most likely change in his program would be to drop a promise to halt his predecessor’s plan to raise corporation tax from 19% to 25%. This would reduce its program bill by around £18 billion a year.

James Athey, the chief investment officer at abrdn, said he now seemed certain the government “is about to flip-flop on its decision not to flip-flop on its outsized tax-cutting policies”. . Rumors calm the markets, he said. .

“The risk now is that investors forget that there are a lot more problems than just ill-advised and untimely tax easing to manage,” he said. “Inflation is at a multi-decade high, government borrowing is huge, as is the current account deficit. The housing market is set to take a hammer blow from soaring mortgage rates and the war in Ukraine. We may be going through the worst of the volatility, but I fear the UK is far from off the hook.”

Conservative lawmakers are debating whether they should try to oust their second leader this year. Truss was elected last month to replace Boris Johnson, who was forced out in July. Some reports suggest senior Tories are plotting to replace Truss with a joint ticket from Rishi Sunak and Penny Mordaunt, his two closest rivals in the summer party leadership contest, although it’s unclear how that might be. be realized.