Prime Minister Liz Truss has fired the Chancellor of the Exchequer Kwasi Kwarteng and replaced him with Jeremy Hunt after markets reacted negatively to what they perceived as un-costed tax cut plans.
Kwarteng was ordered to fly home overnight from International Monetary Fund talks in Washington and was relieved of his duties by Truss, who is expected to announce a shift in financial policy during a press conference on Friday afternoon.
Kwarteng uploaded his resignation letter on Twitter and in it he said: “You have asked me to stand aside as your Chancellor, and I have accepted.”
Hunt is a former Foreign Secretary who ran in the summer’s leadership contest but bowed out early and gave his support to Rishi Sunak. He will be the fourth chancellor this year following Sunak, Nadhim Zahawi, and Kwarteng.
He went on to praise Truss and said: “We have been colleagues and friends for many years. In that time I have seen your dedication and determination. I believe your vision is the right one.”
Truss defeated former Chancellor Rishi Sunak in a leadership contest and then signed off on his mini-budget, which gave away a total of £43 billion in tax cuts, including the abolition of the top rate of income tax.
On Oct. 3 she scrapped plans to abolish the top rate of income tax but that has not assuaged the financial markets.
Liberal Democrat leader Sir Ed Davey has called for a general election.
He said: “This mustn’t just be the end of Kwarteng’s disastrous chancellorship, it should be the death knell of the Conservatives’ reckless mismanagement of our economy. It didn’t suddenly start with Kwarteng but it must end now.
“Enough is enough. It started with [former Prime Minister] Boris Johnson failing our country, and now Liz Truss has broken our economy, it is time for the people to have their say in a general election,” Davey added.
In an attempt to spur growth, Kwarteng unveiled the biggest package of tax cuts in half a century on Sept. 23. However, it sparked panic among investors concerned about increased government borrowing, causing the pound to fall and borrowing costs to soar.
Earlier this month Truss told the Conservative Party conference in Birmingham they had made the right decision and would not be changing course.
She said: “Cutting taxes is the right thing to do morally and economically. Morally, because the state does not spend its own money. It spends the people’s. Economically, because if people keep more of their own money, they are inspired to do more of what they do best.”
On Friday Truss also reshuffled the team at the Treasury, appointing Edward Argar as the new Chief Secretary to the Treasury, replacing Chris Philp who will be the new Paymaster General.
Labour’s Shadow Chancellor Rachel Reeves said: “Changing the chancellor doesn’t undo the damage that’s already been done. It was a crisis made in Downing Street: Liz Truss and the Conservatives crashed the economy causing mortgages to skyrocket and has undermined Britain’s standing on the world stage. We don’t just need a change in chancellor, we need a change in government.”
