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Liz Truss sacks Chancellor of the Exchequer and pulls out of tax cuts

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As the British prime minister faces his first crisis of confidence, Finance Minister Kwasi Kwarteng confirmed his dismissal on Friday. The latter is paying the costs of a massive “growth plan” that has panicked the markets. After appointing Jeremy Hunt to replace him, Liz Truss has announced that she will forgo certain tax cuts.

It was on Twitter that Kwasi Kwarteng confirmed his dismissal on Friday, October 14, as reported by the British media. In the eye of the storm over his controversial package of tax measures, the now former Chancellor of the Exchequer nevertheless confirmed the day before that he would still be there in a month’s time, “100%”. Here, however, he is landed by Liz Truss.

“You asked me to resign as finance minister”, “I accepted”, Kwasi Kwarteng wrote in a letter to the head of government, published on his Twitter account, after a little more than a month at the helm of the finance ministry.

Following the media announcement of the Chancellor’s departure, the pound fell against the dollar, losing 1.10% to $1.1199.

In the hot seat after only 38 days in power, the prime minister will speak in a particularly tense context. According to the British press, some MPs from his own camp are already moving to oust him, in the face of disastrous opinion polls announcing a crushing defeat for the majority before the next general election, scheduled for 2024.

Kwasi Kwarteng, who attended the annual meetings of the International Monetary Fund and the World Bank in Washington, rushed back to London on Friday morning, bound for Downing Street shortly afterwards. His budget plan, announced on September 23, which provides tens of billions in tax cuts without clear funding, has destabilized markets, sent the pound crashing and deeply weakened Liz Truss’s government.

Jeremy Hunt has been appointed to replace him. Former Foreign and Health Secretary Jeremy Hunt, 55, was this summer a contender to succeed Boris Johnson as prime minister before joining Rishi Sunak against Liz Truss.

Coaster on the rise in corporate tax to “calm the markets”

In the early afternoon, Liz Truss spoke at a very short press conference. She has announced that she is abandoning her plan not to raise corporation tax as planned by the previous government. A new face on its package of economic measures to “calm the markets”.

“It is clear that parts of our mini-budget went too far and too fast for what the markets expected,” said the prime minister, who stressed the need for “stability” for the UK economy, after sacking Kwasi Kwarteng.

Despite criticism, including from her own camp, and a difficult political and economic moment, Liz Truss hammered home her determination to implement her growth support policy: “I am absolutely determined to keep the promise that I am about getting stronger growth, a more prosperous Britain, and coming out of the storm we’re going through.”

While the Conservative Congress had already been marked by internal tension and dissension at the beginning of the month, some elected Conservatives are now privately naming names to replace Liz Truss. A Rishi Sunak-Penny Mordaunt ticket, two candidates beaten by Liz Truss in the Downing Street race, would be named, according to the press.

Rishi Sunak, a former finance minister, was Tory MPs’ preferred candidate. But the final decision rested with party members, who elected Liz Truss in early September, who then rejected the Sunak camp from government.

Britons, faced in recent weeks with sky-high mortgage rates on top of 10% inflation, are losing confidence and patience: 50% of them want the Conservative Party to replace Liz Truss. Almost half (43%) of voters who voted for the Conservative Party in the latest poll also want a new prime minister, and 66% believe party members made the wrong choice, according to a YouGov poll published on Thursday evening.

On Friday morning, Downing Street appeared unprepared for any bending, and the Secretary of State for Trade, Greg Hands, had confirmed there was “absolutely no plan to change anything” in the mini-budget. “The Prime Minister and the Chancellor of the Exchequer are absolutely determined to stick to their growth plan,” he said on LBC radio.

One of the leaders of the Labor opposition, Ed Miliband, meanwhile, criticized a “collapsed government and a tattered economic policy”. “Frankly, I think the Conservative Party should be ashamed of what they are doing to the country,” he said on Sky News.

With AFP

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