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Kwarteng (L) and Truss during the Tory conference earlier this month. Alamy Stock Photo
UK Politics

Truss sacks Kwarteng and makes another mini-budget u-turn in bid to save her premiership

Truss has appointed Jeremy Hunt as the new Chancellor of the Exchequer.

LAST UPDATE | 14 Oct 2022

BRITISH PRIME MINISTER Liz Truss dramatically sacked chancellor Kwasi Kwarteng and ditched one of his key tax-cutting measures this afternoon as she attempted to shore up her faltering premiership.

After three weeks of turmoil on the UK’s financial markets in the wake of Kwarteng’s £43 billion mini-budget tax giveaway, the British Prime Minister acknowledged “the way we are delivering our mission right now has to change”.

She has replaced Kwarteng with Jeremy Hunt, the former foreign secretary who backed her rival Rishi Sunak in the Tory leadership contest.

While his appointment was welcomed by some Tory MPs as “an experienced pair of hands”, some questioned why Kwarteng was the one who had to go when he was pursuing policies Truss advocated in her leadership campaign.

At a hastily arranged news conference in Downing Street following the announcement of Kwarteng’s departure, Truss dismissed calls for her resignation, saying she is “absolutely determined to see through what I have promised”.

As had been widely predicted, she announced she is abandoning Kwarteng’s commitment to drop the planned rise in corporation tax from 19% to 25% – even though it was a central plank of her leadership campaign – saving the Exchequer £18 billion a year.

She also signalled a new squeeze on public spending which would “grow less rapidly than previously planned”.

Truss described it as a “down payment” on the medium term fiscal plan on 31 October – when Hunt will now set out how he intends to get the public finances back on track – suggesting further measures to plug the estimated £60 billion black hole created by the mini-budget will have to follow.

“It is clear that parts of our mini-budget went further and faster than markets were expecting so the way we are delivering our mission right now has to change,” she said.

“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”

Resignation letter

Kwarteng had flown back to London earlier for crisis talks after cutting short a visit to the International Monetary Fund’s annual meeting in Washington.

He published his resignation letter shortly after 1pm this afternoon.

“Dear Prime Minister, you have asked me to stand aside as your Chancellor. I have accepted,” Kwarteng wrote.

“When you asked me to sere as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right,” Kwarteng said.

“As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation — that must still change if this country is to succeed,” he said. 

“The economic environment has changed rapidly since we set out the Growth Plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I commend my officials for their dedication,” Kwarteng added. 

Kwarteng’s sacking came after UK trade minister Greg Hands earlier brushed off suggestions Truss could be forced to sacrifice the Chancellor to save her job, insisting his position is “totally safe”.

“I know the Prime Minister has got total confidence in Kwasi Kwarteng,” he told Sky News, calling the Chancellor “an incredibly capable person, a very, very bright person who makes good judgment calls”.

Before he left the US, Kwarteng answered “absolutely 100%” when asked if he will be in office in a month, adding: “I’m not going anywhere.”

Includes reporting by Press Association

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