Kwasi Kwarteng Quits As Chancellor Amid U-Turn Speculation

October 14, 2022

Kwasi Kwarteng is out as chancellor, sources have confirmed.

Mr Kwarteng has just arrived back in Downing Street after cutting short a US trip for crunch talks with Liz Truss.

Ms Truss is later expected to announce a U-turn on business tax cuts - a key Kwarteng policy - at a press conference later.

Mr Kwarteng is the second shortest-serving Chancellor after just 38 days in the job.

For days, Ms Truss has faced calls to drop parts or all of her economic plan to calm market turbulence and reassure her party.

Some Tory MPs have discussed options to remove Mr Truss as prime minister, laying bare divisions within the party, which has been in power for 12 years.

Ms Truss has already U-turned on her plan to scrap the top rate of income tax and some Tory MPs believe another change of course is inevitable.

A further U-turn is likely to be seen as a blow to Ms Truss's political authority only 39 days after she became prime minister.

Labour's shadow chancellor Rachel Reeves said a "humiliating u-turn is necessary" after the government "plunged our economy into chaos and crisis with Truss' discredited trickle-down approach".

Ms Truss's pledge to cut taxes was at the heart of the economic agenda that won her the Tory leadership at the start of September.

The mini-budget - announced by Mr Kwarteng on 23 September - included £45bn of tax cuts and an energy package worth £60bn over six months, partly funded by borrowing.

There were few details on how the government would fund the package, which left financial markets reeling, sent the pound plummeting, and forced the Bank of England to bail out pension funds.

The chancellor was due to make a financial statement on 31 October, but it is unclear whether that will change.

Meanwhile, financial markets rallied and the pound held firm as speculation mounts about a possible U-turn over the mini-budget.

The Bank of England has been buying government bonds - known as gilts - to try to stabilise their price and prevent a sell-off that could put some pension funds at risk of collapse.

But that support is due to come to an end on Friday.

Source: BBC
Image source: Getty Images

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