British Prime Minister Liz Truss is sacking her finance minister Kwasi Kwarteng and scrapping parts of their economic package, UK media has reported, in a bid to survive the market and political pressure unleashed by their fiscal plan.
BBC News reported that Mr Kwarteng had already left the post this afternoon, while the Times earlier said he was expected to be fired today.
Downing Street confirmed that Ms Truss, in power for only 37 days, would hold a press conference later today. Minutes earlier Kwarteng landed back in London after he left IMF meetings in Washington early to work on their economic plan.
British government bonds rallied further, adding to their partial recovery since Ms Truss’s government started looking for ways to balance the books after her unfunded tax cuts crushed the value of British assets and drew international censure.
Mr Kwarteng had announced a new fiscal policy on 23 September, delivering Ms Truss’s vision for vast tax cuts and deregulation to try to shock the economy out of years of stagnant growth.
But the response from markets was so ferocious that the Bank of England had to intervene to prevent pension funds from being caught up in the chaos, as borrowing and mortgage costs surged.
Ms Truss and Mr Kwarteng have been under mounting pressure to reverse course since, as polls showed support for their Conservative Party had collapsed, prompting colleagues to openly discuss whether they should be replaced.
Having triggered a market rout, Ms Truss now runs the risk of bringing the government down if she cannot find a package of public spending cuts and tax rises that can appease investors and get through any parliamentary vote in the House of Commons.
The opposition Labour party’s Chris Bryant, who chairs parliament’s Committee on Standards and Privileges, wrote on Twitter: “If you can’t get your budget through parliament you can’t govern. This isn’t about u-turns, it’s about proper governance.”
Ms Truss’s search for savings will be made harder by the fact government departments have spent a decade cutting their budgets, while discipline in the governing party has frayed following six years of fractious post-Brexit political drama.
Sources familiar with the matter told Reuters that Mr Kwarteng left a meeting of global finance ministers in Washington to rush back to London and join ministers who are looking for ways to balance the books.
The political editor of the Times newspaper reported that Mr Kwarteng was being sacked. Downing Street declined to comment but he had not been expected to appear at Ms Truss’s news conference later today, fuelling speculation about his future.
During his time in the United States Kwarteng had been told by the head of the International Monetary Fund of the importance of “policy coherence”, underlining how far Britain’s reputation for sound economic management and institutional stability had fallen.
Shortly before 11am Britain’s television news channels switched to carry live footage of a British Airways plane landing at Heathrow, carrying Mr Kwarteng.
In Westminster, Ms Truss was trying to find agreement with her cabinet ministers on a way to preserve her push for growth while also reassuring the markets and working out which of the measures could be supported by her lawmakers in parliament.
Earlier a minister in the trade department, Greg Hands, had said people wanting details on the budget would have to wait until 31 October when Kwarteng was due to set out his full plan alongside independent forecasts that will show the cost of the tax cuts to the public finances and whether they will boost economic growth.
Critics of the government had said that wait was unacceptable.
A Conservative Party MP, who asked not to be named, said Ms Truss’s economic policy had caused so much damage that investors may demand even deeper cuts to public spending as the price for their support.
“Everything’s possible at the moment,” said the lawmaker, who backed Mr Sunak in the leadership race.
“Problem is the markets have lost trust in the Conservative Party – and who can blame them?”
Another MP said earlier this week that Ms Truss needed to appreciate that there was not a huge amount of enthusiasm for her at the moment.
According to a source close to the prime minister, Ms Truss is now in “listening mode” and inviting lawmakers to speak to her team about their concerns to gauge which parts of the programme they would support in parliament.
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