UNITED KINGDOM: British Prime Minister Liz Truss fired her Finance Minister, Kwasi Kwarteng, on Friday. PM Truss is shortly expected to scrap parts of Kwarteng’s economic plan to survive the market and political turmoil gripping the country.
Downing Street confirmed that Truss, who has barely been in office for 37 days now, will hold a press conference later on Friday after Kwarteng was forced to rush back to London from IMF meetings in Washington.
Kwarteng said he had resigned at Truss’s request.
“You have asked me to stand aside as your Chancellor. I have accepted,” said his resignation letter to Truss, which Kwarteng published on Twitter.
The decision makes Kwarteng Britain’s shortest-serving chancellor since 1970, and his successor would be the fourth finance minister in as many months.
Kwarteng had announced part of his new economy package on September 23 to deliver Truss’s vision for tax cuts and deregulation to try and shock the economy out of years of stagnancy.
However, the market response was so shockingly resistant that the Bank of England was forced to intervene to prevent pension funds from being entangled in the chaos as borrowing and mortgage costs multiplied.
The duo has since been under mounting pressure to reverse course, as polls showed support for their Conservative Party had collapsed, prompting colleagues to discuss whether they should be replaced openly.
Having triggered the market pace, Truss now runs the risk of a systemic collapse if her administration does not find a package of public spending cuts and tax rises that can appease investors and get through any parliamentary vote in the House of Commons.
It will be harder for her to search for savings since the government has been cutting down departmental budgets for years.
Simultaneously, the Conservative Party has struggled to find its footing due to infighting, as it worked first to agree to a way to leave the European Union, then navigate the COVID-19 pandemic and grow the economy.
“If you can’t get your budget through parliament, you can’t govern,” Chris Bryant, a senior lawmaker from the opposition Labour Party, said on Twitter. “This isn’t about u-turns, it’s about proper governance.”
Downing Street has so far refused to comment on the matter, but Kwarteng is expected to arrive at Truss’s conference later on Friday, sparking speculation about his future.
Meanwhile, Kwarteng received quite the reality check back in Washington when he was told by the head of the International Monetary Fund (IMF) about the importance of “policy coherence”, underlining how far Britain’s reputation for stable economic growth and institutional management had fallen.