British Prime Minister Liz Truss yesterday dismissed her finance minister, forcing Kwasi Kwarteng to carry the can for turmoil sparked by her economic platform as restive Conservatives plotted her own demise.
The chancellor of the exchequer was dismissed in person by Truss after he rushed back early from international meetings in Washington, multiple media reports said, and she was due later to hold her first Downing Street news conference.
There was no immediate announcement of his successor, who would become Britain’s fourth chancellor of the exchequer this year.
Photo: Reuters
Financial upheaval sparked by the new government’s Sept. 23 plan to slash taxes — financed via billions in more borrowing — has subsided somewhat since the Bank of England intervened in bond markets.
However, the central bank was adamant about ending its bond-buying spree yesterday, and market analysts said only a bigger climbdown by Truss following Kwarteng’s disastrous budget announcement last month would avert fresh panic.
No timing was given for Truss’s news conference, but the announcement underscored the sense of peril as some Conservative lawmakers reportedly mobilized to unseat the new leader just five weeks since she succeeded Boris Johnson.
Kwarteng was due to conclude annual meetings of the IMF and World Bank in Washington this weekend, after earning a rebuke from IMF managing director Kristalina Georgieva on the need for “coherent and consistent” policies.
Kwarteng confirmed his dismissal, posting his letter of resignation on Twitter.
“You have asked me to stand aside as your Chancellor. I have accepted,” Kwarteng wrote.
“It is important now as we move forward to emphasise your government’s commitment to fiscal discipline. The Medium-Term Fiscal Plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches,” he wrote.
Tony Travers, a professor at the London School of Economics, said that Kwarteng had been made “the fall guy for the government’s mistakes,” but the sacking had not taken the pressure off Truss or calmed the Conservatives.
“It’s very hard to see them coming back from this” by the next election, he added.
Speculation was rife that Truss would row back on planned changes to corporation tax, having already changed her mind about cutting income tax for the highest earners.
The promised tax cuts were the centrepiece of Truss’s successful pitch to Conservative party members that she, rather than rival Rishi Sunak, was the best candidate to replace Johnson. That program now lies in tatters, and Truss’ judgement is in question more than ever, after Sunak’s warnings were entirely vindicated: Higher borrowing to pay for tax cuts served only to terrify the markets and drive up borrowing costs for millions of Britons.
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