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The pound fell against the dollar today after financial markets reacted to news that Chancellor Kwasi Kwarteng has been fired.
The prime minister later holds a press conference in which she is widely tipped to bow to political and economic pressure to roll back the mini-budget and raise corporate taxes.
But she will now face the cameras alone without a longtime ally, Mr. Kwarteng, by her side, after tearing apart another central piece of his tax-saving mini-budget for growth.
Shortly before 12.30 pm the news came out that Mr. Kwarteng had been fired. It is not yet clear who will replace him, number 10 declined to comment.
Earlier today, the pound had appreciated near its highest level in a week to $1.13 against the US dollar, with Mr. Kwarteng flying back to the UK from an International Monetary Fund summit in Washington this morning. .
But after reports emerged of the chancellor’s resignation, the value fell 1.2 percent back to $1,119, with the FTSE 100 also taking a hit – from 6,946 to 6,920.91 at 1 p.m.
After reports emerged of the Chancellor’s resignation, the pound fell to $1,119, with the FTSE 100 also taking a hit
The pound fell against the dollar today after financial markets reacted to news that Chancellor Kwasi Kwarteng has been fired
But the FTSE 100 rebounded as the Square Mile reacted to the shocking resignation of Chancellor Kwasi Kwarteng
Mr Kwarteng’s departure makes him the second shortest-serving chancellor in modern British politics, after Iain Macleod, whose career was ended by his death after 30 days in office in 1970.
Since 2019, the UK has had four chancellors, including Nadhim Zahawi, who served the third-shortest term in office at 62 days during a short-lived reshuffle under Boris Johnson, and Sajid Javid who served 204 days – the fourth shortest term ever.
Mr Kwarteng posted a letter to the Prime Minister on Twitter shortly after news of his resignation came out.
He said he had “accepted” Ms Truss’ request to “step aside” as chancellor.
“When you asked me to be your chancellor, I did so in full awareness that the situation we were facing was incredibly difficult, with rising global interest rates and energy prices,” he continued.
‘However, your vision of optimism, growth and change was correct. As I’ve said many times over the past few weeks, following the status quo just wasn’t an option.
“This country has been haunted for too long by low growth rates and high taxes – that has yet to change if this country is to succeed.
“The economic environment has changed rapidly since we drew up the Growth Plan on September 23.
“In response, along with the Bank of England and outstanding officials of the Treasury, we have responded to these events and I commend my officials for their decision.
“It is important that we go further to emphasize your government’s commitment to fiscal discipline.
“The medium-term budget plan is crucial and I look forward to supporting you and my successor in achieving that from the back seat.
‘We have been colleagues and friends for years. During that time I have seen your dedication and determination. I believe your view is correct. It was an honor to be your first chancellor.
“Your success is the success of this country and I wish you the best.”
Truss made plans to raise the corporate tax rate from 19 per cent to 25 per cent – at a cost of £18bn – a central part of its leadership campaign and it was unveiled as a policy three weeks ago as a key lever for growth.
But she is expected to announce the rate will go up next year after weeks of economic and political turmoil in Westminster that now threaten her position.
Mutinous Conservative MPs have given the prime minister 17 days to save her job, with claims that Rishi Sunak and Penny Mordaunt, both failed summer leadership challengers, are lining up to replace her.
Mr. Kwarteng was due to make an economic statement on October 31, but this date is now in doubt following news of the chancellor’s departure.
Mr Kwarteng’s departure makes him the second shortest-serving chancellor in modern British politics, after Iain Macleod, whose career was ended by his death after 30 days in office in 1970
Since 2019, the UK has had four chancellors, including Nadhim Zahawi, who served the third-shortest term in office at 62 days during a short-lived reshuffle under Boris Johnson, and Sajid Javid who served 204 days – the fourth-shortest term ever.
Markets have been volatile and the Conservative Party feverish since Mr Kwarteng’s announced tax cuts last month were paid for by borrowing.
The government had to announce a turnaround after an uprising and reintroduce the 45p income tax rate for the UK’s richest people.
Asked about the prospect of another humiliating U-turn, the Chancellor said yesterday, “Let’s see.”
Government bonds and the pound stabilized at the start of trading in London as the Bank of England’s bond-buying program comes to an end, a sign that markets are pricing in a turnaround.
Treasury and UK government bond yields rose in a sell-off after Kwarteng announced unfunded mini-budget tax-cutting plans last month and moved back up earlier this week.
At market opening, UK 30-year government bond yields fell 1.6 percent to 4.47 percent, while 10-year government bonds fell 1.8 percent to 4.11 percent.
At market opening, UK 30-year government bond yields fell 1.6 percent to 4.47 percent, while 10-year government bonds fell 1.8 percent to 4.11 percent.