Kwasi Kwarteng resigns as Liz Truss reverses his policies

LONDON — British Prime Minister Liz Truss has been catapulted into high office by her bold promises to supercharge the country’s flagging economy with big tax cuts for corporations, investors and high earners.

It didn’t go well. His prime ministership and government, the markets — and members of his own party — are wondering how he can simultaneously cut taxes and maintain social programs without taking on deep debt.

On Friday, Kwasi Kwarteng, the architect of his development plan, announced he had been asked to resign as Chancellor of the Exchequer, Britain’s title for finance minister.

UK Prime Minister Liz Truss defends first month in office amid protests

He was fired after Kwarteng’s policies led to deflation and the Fed’s descent into quiet markets. Jeremy Hunt, a former cabinet minister, was appointed as the new chancellor.

In a letter Posted on Twitter, Kwarteng wrote that Truss asked him to quit. “As your chancellor you asked me to stand aside. I accepted,” he wrote. “It is now critical that we move forward to emphasize your government’s commitment to fiscal discipline.”

Kwarteng, a pro-marketeer and ardent Brexiteer, lasted only a month in the top economic job. He flew home to London from Washington earlier on Friday as British newspapers tracked his flight. He attended a meeting of the International Monetary Fund, his first appearance as president at a major economic summit.

Truss is scheduled to hold a news conference Friday afternoon, during which he is expected to announce the elimination of parts of his unfunded tax cuts.

“I greatly respect the decision you have made today,” he wrote in a letter to Quarteng. The language struck many as a bit odd as he was asked to resign.

Just three weeks ago, with bold headlines, the President announced the government’s new “growth plan”.

Those proposed cuts are being slashed quickly.

Last week, Kwarteng said the government would scale back plans to cut the top income tax rates paid by high-earning Britons.

Affluent Britons pay 45 percent on annual incomes above £150,000 ($168,000). The truce wants to cut the rate above 40 percent from April 2023.

Lowering the top rate to countries like Norway, Italy and the US would “attract the best and brightest workers to the UK, helping businesses innovate and grow”, argued Quarteng.

A shout of protest – and Kwarteng Cave. Truss may announce on Friday whether he will reverse his promise to cut taxes for corporations and investors.

Disaster played out quickly.

A source in the Prime Minister’s Office in Downing Street told the BBC on Friday that Truss thought the chancellor was “doing a great job” and that the two were “in lock step”.

The president told reporters on Thursday “Going Nowhere” He agreed as part of the announcement of the government’s fiscal plan despite market turmoil.

Asked if he and his boss, the prime minister, would get their jobs within a month’s time, the chancellor replied, “Absolutely, 100 percent.”

The pound rose again after the UK government reversed part of its tax policy

Truss was creamed at the weekly Prime Minister’s Questions on Wednesday, then gave a disastrous performance in a private meeting with lawmakers working in the background, some of whom gave briefings to journalists.

One lawmaker told the Financial Times “The mood is frankly funereal, terrible. I was shocked at how horrible it was.

Mujtaba Rahman, an analyst at Eurasia Group, said in a briefing note on Friday that the truss was more likely to be lifted before the next election, which could finally happen by January 2025.

He said a group of Conservative lawmakers planned to oust him by Christmas, and some were floating the idea of ​​a “moderate dream ticket” from Rishi Sunak and Benny Mordant, the two incumbents in the last party leadership race.

“While some MPs say the plan to scrap the tress would make the Conservatives more ridiculous than they are now, a growing number believe it is the only way to prevent a Labor landslide in 2024,” he wrote.

Under the current rules of the Conservative Party, there cannot be a leadership contest for another year. But those rules can be changed.

The Bank of England was scheduled to end its highly unusual intervention on Friday, which saw it buy government bonds aimed at stabilizing spooked markets following a September 23 new policy announcement. The bank was particularly concerned about some pension funds.

Britain will soon appoint its fourth prime minister in less than four months. Kwarteng was on duty for only 38 days. Ian McLeod, the only shorter-serving president in office, died of a heart attack in 1970 after 30 days.

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