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

Agencies |London

The Daily Tribune – www.newsofbahrain.com

British Prime Minister Liz Truss fired her finance minister Kwasi Kwarteng and scrapped parts of their unpopular economic package yesterday in a desperate bid for political survival less than 40 days into her premiership.

With financial markets in turmoil, achastened Truss said she accepted her government’s plans for unfunded tax cuts had gone “further and faster” than investors were expecting.

“I have acted decisively today because my priority is ensuring our country’s economic stability,” she told a brief news conference in Downing Street. “I want to be honest, this is difficult.

But we will get through this storm.”

The pound and British government bond prices tumbled after she spoke, with economists and investors saying her reversal of 20 billion pounds ($22 billion) of tax cuts was not yet enough to restore calm.

Earlier Truss fired her finance minister and close friend, Kwarteng, after he rushed back to London overnight from IMF meetings in Washington where Britain’s chaotic recent management of its economy was a focal point.

To replace him, she appointed Jeremy Hunt, a former foreign and health secretary who had backed her rival Rishi Sunak in this summer’s race to become Conservative Party leader.

He is the fourth finance minister in as many months in Britain, where millions are facing a cost of living crisis.

Kwarteng becomes Britain’s shortest serving finance minister except for a predecessor who died suddenly in office in 1970.

“You have asked me to stand aside as your Chancellor.

I have accepted,” he wrote in his resignation letter to Truss.

Truss’s own position is now in jeopardy. She won the Conservative Party leadership last month by promising vast tax cuts and deregulation that she said would shock the economy out of years of stagnant growth.

Kwarteng’s Sept. 23 fiscal announcement aimed to deliver that vision.

But the backlash from markets was so ferocious that the Bank of England had to intervene to prevent pension funds being caught up in the chaos, as borrowing and mortgage costs surged.

“She’s toast,” one party lawmaker said.