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LONDON — British Prime Minister Liz Truss has fired her finance minister, Kwasi Kwarteng, as she fights to hang on as prime minister after her budget crashed the markets.
In a hastily-arranged press conference, Truss defended her “mission” to deliver a “low tax, high wage” economy that prioritizes growth. She announced that she will reverse her proposal to halt a planned rise in corporation tax and tighten public spending, conceding that parts of her budget went “further and faster than markets were expecting.”
Downing Street announced Jeremy Hunt, who has previously served as health secretary and foreign secretary, would replace Kwarteng as chancellor.
Despite several attempts to calm the markets, including reversing a plan to cut tax for the highest earners and bringing forward a more detailed budget statement, Truss has struggled in the face of sustained economic and political pressure. The decision to call an audience with the press — generally taken in exceptional circumstances — underlines the precariousness of her position little more than a month after she took office.
Truss’ team hopes that in firing her chancellor she will save her premiership, though that looks doubtful given a lack of support among Tory MPs in part because the plan to cut taxes was central to her campaign for the Conservative party leadership this summer.
Chancellor Kwarteng cut short a trip to Washington for meetings with the International Monetary Fund as his recently announced plans for major tax cuts came under increasing strain in the face of market turmoil.
In a letter to the prime minister, Kwarteng wrote: “We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been an honour to serve as your chancellor. Your success is this country’s success and I wish you well.”
The Times reported that ministers would now increase corporation tax whereas they had previously planned to freeze it, in line with suggestions made to POLITICO earlier this week.
Truss “must come up with a credible tax policy and that will involve some retrenchment from the announced position,” a senior government insider told POLITICO’s London Playbook.
Kwarteng had been due to announce a “medium-term fiscal plan” with full details of how the government plans to balance the books on October 31.
Rachel Reeves MP, Labour’s shadow chancellor, said: “Changing the Chancellor doesn’t undo the damage that’s already been done. It was a crisis made in Downing Street. Liz Truss and the Conservatives crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage.”
“We don’t just need a change in Chancellor, we need a change in government,” she added.
This article has been updated.
Matt Honeycombe-Foster contributed reporting.
Esther Webber and Eleni Courea
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