LONDON – Britain’s Finance Minister Kwasi Kwarteng said on Friday he has resigned after Prime Minister Liz Truss asked him to step aside.
You have asked me to stand aside as your chancellor. I have accepted, Mr Kwarteng said in his resignation letter to Truss, which he published on Twitter.
His firing comes amid speculation that Ms Truss will today announce a U-turn on parts of the mini-budget.
The BBC said Mr Kwarteng would be the second shortest-serving British chancellor on record.
The shortest serving chancellor, MrIain Macleod, died of a heart attack 30 days after taking the job in 1970.
Since 2019, Britain has had four chancellors, including Mr Nadhim Zahawi, who served the third shortest tenure with 63 days during a short-lived reshuffle under former prime minister Boris Johnson, and Mr Sajid Javid, who served 204 days, the fourth shortest tenure on record.
The Times reported that former British foreign minister Jeremy Hunt could succeed Mr Kwarteng as finance minister.
Multiple sources are now telling me that Jeremy Hunt will be the new chancellor, although Ive not had official confirmation yet, Mr Steven Swinford, political editor of The Times, said on Twitter earlier.
The pound plunged against the US dollar, as investors seized on reports of Mr Kwarteng’s sacking over his debt-fuelled budget that sparked markets chaos. The currency sank 1.1 per cent to US$1.1199.
The Daily Telegraph, meanwhile, reported that Ms Truss, in a keenly awaited presser, would keep her planned cut to payroll tax, known as the National Insurance, and 1 pence income tax basic rate cut.
Sources told Bloomberg these, along with replacing Mr Kwarteng,are among the plans by Ms Truss to reverse parts of her economic strategy, following weeks of market pressure on her to explain how she would pay for her programme.
Attention has focused in recent days on whether she will cancel plans to freeze corporation tax in 2023, instead of raising it as previously planned.
There has been a growing clamour for the embattled prime minister to reverse course ever since Sept 23, when Mr Kwarteng announced Britains biggest set of unfunded tax cuts in half a century.
That spooked the markets, sending the pound plummeting to a record low against the US dollar and forcing the Bank of England into an emergency intervention to support the bond market. That is due to end on Friday, adding pressure on the government to act.
While the details are unclear as to which bits of her plan she will unpick, that Ms Truss is having to do so at all is a major blow to her just over five weeks into her tenure.
She and Mr Kwarteng have staked their reputations on an all-out pitch for growth, and Ms Truss has sought to portray herself as a leader who would be resolute in pursuing her goals. Embed Twitter Tweet URL But with the Conservative Party tanking in the polls, Tory MPs openly demanding a change of course, and financial markets still in turmoil, the pair have found themselves boxed into a corner with no easy exit.
They can either stick to their guns and face the prospect of more market chaos, or shred their reputations by changing tack. More On This Topic 'KamiKwasi' economics: Baptism of fire for UK's new finance minister Kwarteng Britain in crisis: How not to run a country Officials have been drafting options for Truss on how to change course and plug the 60 billion (S$96billion) black hole that the Institute for Fiscal Studies estimated has opened up in the public finances.
Corporation tax is seen as the most likely target of a policy reversal, especially as it was one area Mr Kwarteng refused to rule out reversing on Thursday.
Under Mr Johnsons administration, the levy was due to rise to 25 per centfrom 19 per centin April.Ms Trusss government has vowed to scrap the rise.
When Mr Kwarteng unveiled his strategy last month, the Treasury estimated it would cost an average of more than 13 billion a year over five years.
Other options include reversing a planned cut in the basic rate of income tax to 19 per centfrom 20 per cent a politically unpalatable course of action; cuts to spending something Ms Truss vowed not to do on Wednesday; and reversing smaller measures including a VAT refund on shopping for tourists and a planned cut in dividend tax.BLOOMBERG, REUTERS More On This Topic Britain's deep tax cuts spook investors How Leninism conquered British politics