Kwasi Kwarteng sacked as Chancellor after UK economy chaos

Kwasi Kwarteng has been sacked as Chancellor by Prime Minister Liz Truss, after just weeks in the job.

It comes after his so-called mini-budget unleashed chaos on the UK economy.

Jeremy Hunt has been appointed as his successor and the PM has reversed the policy to scrap the planned rise in corporation tax from 19 per cent to 25 per cent.

Mr Kwarteng flew back early from International Monetary Fund talks in Washington on Friday to be informed of his fate in a brief meeting with the Prime Minister.

He tweeted a letter confirming he had been asked to “stand aside” by the PM.

In it, he acknowledges the “economic environment has changed rapidly” since they set out the Growth Plan on September 23.

The pound fell to an all-time low against the dollar following the mini-budget, and efforts to calm the markets have so far been unsuccessful. Householders have seen their mortgages spiral.

This afternoon (Friday), Ms Truss staged a brief press conference in Downing Street in which she announced the U-turn on corporation tax - a key plank of Mr Kwarteng’s £43billion tax giveaway - but did not apologise for the chaos.

It means corporation tax will rise as originally planned in April, bringing in £18bn a year to the Treasury.

But that may not be enough to settle the markets, which have already “priced in” significant changes.

Ms Truss insisted that she will “always act in the national interest”, adding: “We will get through this storm.”

She said: “It is clear that parts of our mini-budget went further and faster than markets were expecting so the way we are delivering our mission right now has to change.”

The PM begun her press conference by saying: “My conviction that this country needs to go for growth is rooted in my personal experience.

“I know what it’s like to grow up somewhere that isn’t feeling the benefits of growth. I saw what that meant. And I’m not prepared to accept that for our country. I want a country where people can get good jobs, new businesses can set up and families can afford an even better life.

“That’s why from day one, I’ve been ambitious for growth.”

Before he left the United States, Mr Kwarteng had insisted he stood by his economic growth plan and would be setting out how he intended to get the public finances back on track in a statement on October 31.

His departure and the latest U-turn raise fresh questions about Ms Truss’ chances of survival, given that she was closely linked to the policies that caused the economic chaos.

The commitments to reverse a hike in National Insurance rates and ditch a planned rise in corporation tax, without explaining how they would be paid for, were the key planks of her Tory leadership election campaign.

Already, the pair had been forced into a U-turn over the controversial abolition of the top rate of income tax for the highest earners.

Mr Kwarteng’s fiscal statement had come under fire from all quarters in the last few weeks.

Pippa Heylings, the Liberal Democrat Parliamentary candidate for South Cambridgeshire, was damning of its impact.

She said the “out of touch and shambolic budget” had been “exposed as a reckless gamble”, adding: “The Conservatives are giving huge unfunded tax cuts to the banks, while neglecting local health services and hammering ordinary people with years of tax hikes.

“People in South Cambridgeshire I’ve spoken to are really concerned about being landed with higher bills for food and fuel as well as making it even harder to afford to get a place to live with impossibly higher mortgage payments thanks to the government’s incompetence.”

Following news of Mr Kwarteng’s departure, Liberal Democrat leader Sir Ed Davey promptly called for a General Election.

He told the BBC: “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.”

Mr Kwarteng, who was appointed on September 6, becomes the second shortest-serving UK Chancellor on record after Iain Macleod, who died of a heart attack 30 days after taking the job in 1970.

The appointment of Mr Hunt, a former foreign secretary and health secretary, met with approval from South Cambridgeshire’s Conservative MP, Anthony Browne.

“I very much welcome Jeremy Hunt’s appointment as Chancellor. He is a veteran cabinet minister with experience across government, and widely seen as a safe pair of hands. I have no doubt he will be able to restore the financial markets’ confidence in the government’s economic policy,” he said.

When he previously stood, unsuccessfully, for leadership of the Tory party, Mr Hunt had put forward of cutting corporation tax to 15 per cent.