KWASI Kwarteng has today been SACKED by Liz Truss following the market meltdown unleashed by his mini-Budget.
In a letter to the PM confirming his departure, the fired Chancellor said: “You have asked me to stand aside as your Chancellor. I have accepted.”
The PM made her close pal the government’s fall guy for the economic chaos as she looks to reset her battered premiership just weeks into the job.
Mr Kwarteng this morning arrived back in London after cutting short his trip to Washington for crisis talks in Downing St with Ms Truss.
But he was instead hauled in to No10 to be fired, later confirming he had been ditched in a letter “wishing Ms Truss well”.
Sticking by his tax-cutting vision, he said: “As I have said many times in the past few weeks, following the status quo was not an option.
“For too long this country has been dogged by low growth rates and high taxation – that must change if this country is to succeed.”
Ms Truss replied that her old ally had “put the national interest first”.
On a dramatic day:
Embattled Ms Truss will hold a solo press conference this afternoon where she is expected to u-turn on parts of her tax-cutting mini-Budget.
Former Foreign Secretary Jeremy Hunt has replaced Mr Kwarteng in the Treasury.
Fewer than 24 hours ago Mr Kwarteng insisted in an ill-fated interview he was “absolutely going nowhere”.
Yet now he is the second shortest-serving Chancellor in history, with his 38 days only being beaten by Iain Macleod’s 30 days in 1970.
Only this morning No10 sources insisted the PM and her Chancellor were in “lockstep” and there would be no more u-turns.
In her address to the nation the PM is likely to abandon plans to scrap a rise in Corporation Tax from 19 to 25 per cent next year.
Stopping the rise in Corporation Tax was a flagship pledge made by Ms Truss in the Conservative leadership election.
Rebellious Tory MPs have been urging Ms Truss to row back on his £45billion tax spree to calm the jitters in the money markets.
Mutinous MPs are emboldened after already forcing ministers to reverse plans to axe the top 45p rate of tax.
Mr Kwarteng yesterday admitted his “Growth Plan”, delivered less than three weeks ago, had caused some “turbulence”.
The £45billion of unfunded tax cuts also included a 1p income tax cut next year, a stamp duty cut and reversing the National Insurance rise.
He was due to deliver a statement on Halloween to reassure nervous markets that Britain would able to pay off its debts.
Markets rallied as Mr Kwarteng was sacked. The FTSE 100 of leading shares was up around 1% on Friday.
The pound is trading over $1.12 against the dollar at the time of writing.
After the mini-Budget last month sterling fell to $1.03, its lowest level against the dollar since decimalisation in 1971.
HOW LIZ TRUSS’ TURBULENT FIRST FEW WEEKS UNFOLDED
HOW Liz Truss’ turbulent first few weeks unfolded
September 5 Liz Truss beats Rishi Sunak to win the Tory leadership race
September 6 Liz Truss is formally appointed as PM of the UK
September 23 Kwasi Kwarteng unveils his controversial mini-budget, including £45bn worth of tax cuts
September 26 The pound falls to its lowest level against the dollar since decriminalisation in 1971. Sterling fell by more than 4% to just $1.03 in early trading in Asia, before recovering to $1.09 in the afternoon
September 28 The Bank of England made a dramatic intervention today in a bid to save Brits’ pensions, as several funds faced collapse
October 2 Conservative Party Conference kicked off in Birmingham. A row breaks out over whether the PM should uprate benefits in line with inflation
October 3 Kwasi Kwarteng confirms u-turn on scrapping the 45p top rate of income tax. Meanwhile, ministers and MPs tear each other apart in private briefings and publicly over the PM’s handling of the economy
October 7 House prices dipped in September as mortgage interest rates soared
October 12 Tory MPs demand the PM gets a grip on the economy at an extremely tense meeting of the 1922 backbench committee
October 14 Kwasi Kwarteng is sacked as Chancellor by his friend and ally, the PM
It had jumped to over $1.13 on Thursday after it was revealed that Mr Kwarteng was for the chop.
The Bank of England was forced to take action after the pound plunged and markets went into turmoil over the Chancellor’s unfunded tax cuts.
It started buying up government bonds, also known as gilts, to stabilise financial markets.
The price of the 30-year gilt has gone up, pushing down the yield to 4.35%. Previously it was 5%.
People pay attention to the yields – the amount of interest on the bonds which is described in % terms – because this shows investors’ confidence in them.
The higher the yield, the cheaper the price, and the riskier investors think they are.
The bond buying is set to end today with the Bank of England earlier insisting that it would not be extended.
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.”
Trade Minister Greg Hands this morning insisted there were “no plans” to change the mini-Budget and tried to play down the uncertainty.
He told LBC: “The Prime Minister and the Chancellor are absolutely determined to stick to the growth plan, to stick to the changes they outlined.
“There are absolutely no plans to change anything, except for the fact that there is going to be a medium-term fiscal plan.”