Kwasi Kwarteng, Britain’s Chancellor of the Exchequer, speaks during a side event at the Conservative Party’s annual autumn conference in Birmingham, UK, Tuesday, October 4, 2022.
Hollie Adams | Bloomberg | Getty Images
LONDON — Britain’s Finance Minister Kwasi Kwarteng was sacked on Friday after less than six weeks in the post, amid mounting political pressure and market chaos.
“The economic environment has changed rapidly since we set out the growth plan on September 23. In response, together with the Bank of England and excellent Treasury officials, we have reacted to these events, and I comment on my officials for their dedication,” Kwarteng said in his resignation letter after being asked to resign.
“It is important now, as we move forward, to underscore your government’s commitment to fiscal discipline. The medium-term fiscal plan is crucial to that end, and I look forward to helping you and my successor achieve it from the backseats.
Jeremy Hunt – former health secretary and foreign secretary – has been announced as Kwarteng’s successor. Chris Philp, Chief Secretary to the Treasury, was also replaced by Edward Argar.
Prime Minister Liz Truss is reportedly set to announce that the government will abandon key fiscal policy promises set out in Kwarteng’s controversial “mini-budget” on September 23including vast amounts of unfunded tax cuts.
Among the policies on the chopping block are Kwarteng’s pledge to reverse his predecessor Rishi Sunak’s corporate tax hike from 19% to 25%, estimated at around £19bn ($21.4bn). dollars) by 2026, and a 1.25% tax reduction on dividends.
The government earlier this month abolished its plan to abolish the maximum rate of income tax after substantial public backlash, but that failed to quell the market turmoil.
Kwarteng cut short a visit to Washington on Thursday to return to London as government ministers scrambled to deal with the market chaos unleashed in recent weeks.
Truss had been under immense pressure to rethink his economic policy, with opinion polls showing his support for the crumbling Conservative ruling party and lawmakers from his own party who allegedly plotted to oust him after a tumultuous first five weeks in office.
Despite this, she and Kwarteng had remained publicly resolute in recent days, accusing critics of the government’s sweeping budget plans of being part of an “anti-growth coalition”.
“As I have said many times over the past few weeks, business as usual was simply not an option. For too long this country has struggled with low growth rates and high taxation – and that still needs to change if this country is to succeed,” Kwarteng added in his letter.
“We have been colleagues and friends for many years. During that time, I have seen your dedication and determination. I believe your vision is the right one. It was an honor to be your first chancellor.”
UK government bonds – known as gilts – rallied sharply ahead of Truss’ press conference. The long term Return over 30 years briefly touched 4.261% during the morning session. Yields move inversely to prices.
Sterling whipsawed during a volatile session. It was last seen down 0.8% at $1.1235.