Belgium (Brussels Morning Newspaper) British Prime Minister Liz Truss sacked Finance Minister Kwasi Kwarteng and backtracked on her economic package on Friday after seeing herself and her party reach unprecedented lows in the polls, with voices within the party already calling for the PM to be removed.
Truss came to power a month ago, after the Conservative party membership picked her as the successor to Boris Johnson, who was pressured into resigning following a long string of scandals while in power.
She appointed Kwarteng as Chancellor of the Exchequer – the formal title of finance ministers in Britain – and rushed to deliver on her party leadership campaign promises of vast tax cuts, spending cuts and a wave of deregulation.
Kwarteng presented their fiscal plans on 23 September, which Truss initially claimed would jumpstart the economy after years of stagnant growth. However, their economic package was ill-received both by the public and by the investors, with the pound dropping to near-parity with the US dollar, and the Tories dropping below 20% in the polls for the first time in decades.
Backtracking on the publicly most controversial points of their fiscal plan – scrapping the highest income tax bracket of 45% and refusing to proceed with Johnson’s plans to up the corporate tax from 19 to 25% – failed to either appease the public or calm the markets, leading to a further drop in the bond market.
With the conservatives trailing up to 34 points behind the Labour party, an increasing number of Truss’ colleagues are calling for her to be replaced as PM, fearing the party might be headed towards a near-certain, devastating loss in the next general elections.
Laughing stock
“She’s toast,” one Tory MP told Reuters. Others are describing the current situation as a “mess”, while Chirstopher Chope, a veteran Tory MP who backed Truss for leader is saying the party has become “a laughing stock”.
Kwarteng was fired on Friday just minutes after he returned from a trip to Washington, where he was reportedly chewed out by the head of the International Monetary Fund (IMF), Kristalina Georgieva. Previously, during the meeting of G7 finance ministers, Britain was the main topic of the discussion, indicating how eroded the global trust in the stability of the UK economy has become.
“I have acted decisively today, because my priority is ensuring our country’s economic stability,” said Truss during a brief press conference outside the PM’s residence in Downing Street. “I want to be honest, this is difficult. But we will get through this storm.”
“You have asked me to stand aside as your Chancellor. I have accepted,” wrote Kwarteng in his resignation letter. His resignation made him the shortest-serving finance minister in Britain’s history after Iain Macleod, whose term in office was cut short by a fatal heart attack in July 1970, after a month in the post.
Many commenters feel that Truss decided to throw Kwarteng, her close friend and most loyal backer, under the bus in an attempt to use him as a scapegoat for the failing economy, and to buy goodwill within the party.
Her choice of new Chancellor supports that view, as she announced she will appoint Jeremy Hunt – former Foreign Minister who backed her competitor Rishi Sunak for party leader. Hunt is now expected to deliver a fresh budget plan on 31 October, which means he has two weeks to come up with a solution that could both calm the markets and pass the vote in the Parliament.
