Skip to content
Search

Latest Stories

Truss sacrifices finance minister, scraps tax plan in fight to survive

Truss appointed Jeremy Hunt, a former foreign and health secretary, to replace Kwarteng.

Truss sacrifices finance minister, scraps tax plan in fight to survive

British prime minister Liz Truss fired her finance minister Kwasi Kwarteng on Friday and scrapped parts of their economic package in a desperate bid to stay in power and survive the market and political turmoil gripping the country.

Kwarteng said he had resigned at Truss's request after being forced to rush back to London overnight from IMF meetings in Washington.


Truss, in power for only 37 days, then told a news conference she would now allow a key business levy to rise from next year, raising 18 billion pounds, as she accepted she had gone "further and faster" than markets had been expecting.

"We need to act now to reassure the markets of our fiscal discipline," she said.

Truss appointed Jeremy Hunt, a former foreign and health secretary, to replace Kwarteng.

"You have asked me to stand aside as your Chancellor. I have accepted," Kwarteng said in his resignation letter to Truss, which he published on Twitter.

She said in response: "As a long standing friend and colleague. I am deeply sorry to lose you from the government.

"We share the same vision."

The pound slid against the dollar after she spoke, trading 1.2% lower on the day at $1.1198 and two-year British government bonds, or gilts GB2YT=RR turned negative.

The plan for unfunded tax cuts crushed UK assets and drew international censure, but the pound and gilts have started to recover since the government started looking for ways to balance the books.

Kwarteng is the country's shortest serving chancellor since 1970, and his successor will be the fourth finance minister in as many months in Britain, where millions are facing a cost of living crisis. The finance minister with the shortest tenure died.

Truss's own position is in jeopardy.

She won the Conservative Party leadership last month by promising vast tax cuts and deregulation to try to shock the economy out of years of stagnant growth, and the fiscal policy Kwarteng announced on Sept. 23 aimed to deliver that vision.

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.

The duo had been under mounting pressure to reverse course after polls showed support for the Conservative Party had collapsed, prompting many colleagues to look for ways to force them out of office.

"The party loves the idea of principles and conviction politicians, but staying in power is everything," one party insider told Reuters. "Ruthless can also be popular."

MARKET ROUT

Having triggered a market rout, 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.

Her search for savings will be made harder by the fact the government has been cutting departmental budgets for years.

At the same time Conservative Party discipline has all but broken down, fractured by infighting as it struggled first to agree a way to leave the European Union and then how to navigate the COVID-19 pandemic and grow the economy.

"If you can't get your budget through parliament you can't govern," Chris Bryant, a senior lawmaker from the opposition Labour Party, said on Twitter. "This isn't about u-turns, it's about proper governance."

Underlining how far Britain's reputation for sound economic management and institutional stability had fallen, a source within the Group of Seven leading nations said G7 finance ministers at a meeting this week focused on the problems in Britain, and not the usual subject of Italy.

In Washington, Kwarteng was told by the head of the International Monetary Fund of the importance of "policy coherence". His flight back to London was carried live by television news channels. He was fired minutes after arriving back in Downing Street.

In Westminster, Truss has been trying to find agreement with her cabinet ministers on a way to preserve her push for growth with measures acceptable to her lawmakers that would also reassure financial markets.

Rupert Harrison, a portfolio manager at Blackrock and once an adviser to former British finance minister George Osborne, said markets have now almost fully priced in a U-turn.

"(That) means if the U-turn doesn't come markets will react badly," he said on Twitter.

More For You

Bangladesh's Muhammad Yunus to step down after April polls

Chief adviser to the government of Bangladesh Professor Muhammed Yunus speaks during a live interview at Chatham House on June 11, 2025 in London, United Kingdom. (Photo by Leon Neal/Getty Images)

Bangladesh's Muhammad Yunus to step down after April polls

BANGLADESH interim leader Muhammad Yunus said on Wednesday (11) that there was "no way" he wanted to continue in power after elections he has announced for April, the first since a mass uprising overthrew the government.

The South Asian nation of around 180 million people has been in political turmoil since a student-led revolt ousted then prime minister Sheikh Hasina in August 2024, ending her 15-year rule.

Keep ReadingShow less
Leicester residents invited to shape future of local councils

The proposed reorganisation could save £43m a year, say council leaders, but critics question the figure

Leicester residents invited to shape future of local councils

Hannah Richardson

RESIDENTS can now have their say on a plan which would see the number of local councils in Leicestershire drop from eight to two.

The proposal is one of three put forward for the political re-organisation of Leicestershire after the government told local leaders it wanted areas with two tiers of councils – such as the county – to reduce it to a single-tier set up.

Keep ReadingShow less
Modi & Trump

Donald Trump and Narendra Modi shake hands as they attend a joint press conference at the White House on February 13, 2025.

Reuters

India, US talks edge towards interim trade deal: Report

INDIAN and US negotiators reported progress after four days of closed-door meetings in New Delhi on Tuesday, focusing on market access for industrial and some agricultural goods, tariff cuts and non-tariff barriers, according to Indian government sources.

"The negotiations held with the US side were productive and helped in making progress towards crafting a mutually beneficial and balanced agreement including through achievement of early wins," one of the sources said to Reuters.

Keep ReadingShow less
Jaishankar-Getty

Jaishankar, who is currently in Europe a month after India launched Operation Sindoor, said Pakistan was training 'thousands' of terrorists 'in the open' and 'unleashing' them on India. (Photo: Getty Images)

Getty Images

India will strike deep into Pakistan if provoked, says Jaishankar

INDIA's external affairs minister S Jaishankar has said India would strike deep into Pakistan if provoked by terrorist attacks, and warned of retribution against terrorist organisations and their leaders in response to incidents like the Pahalgam attack.

Speaking to Politico on Monday, Jaishankar, who is currently in Europe a month after India launched Operation Sindoor, said Pakistan was training “thousands” of terrorists “in the open” and “unleashing” them on India.

Keep ReadingShow less