U.K.’s Liz Truss fires Kwasi Kwarteng, reverses policies that sank pound
On Friday, Truss announced that her architect for growth, Kwasi Kwarteng, was resigning as chancellor of the exchequer, Britain’s title for the finance minster.
Truss also said her government would abandon one of her top campaign pledges — and will now allow corporate taxes to rise from 19 percent to 25 percent in April 2023.
The British pound shot up against the dollar on Thursday in anticipation of the news, though it settled slightly on Friday, to about $1.12. Britain’s top stock index, the FTSE 100, was essentially flat.
Kwarteng will be replaced by Jeremy Hunt, who served as Britain’s foreign secretary when Brexit dominated discussions. Hunt lost the Conservative Party leadership race to Boris Johnson in 2019. In that contest, he favored cutting corporate taxes.
He now becomes Britain’s fourth chancellor in four months, taking over economic policy portfolio at a moment the Bank of England is forecasting a recession this winter. The costs of living, especially energy prices, are spiking. Unions are on striking, and mortgage rates are climbing.
In a remarkably short news conference on Friday, reporters asked no questions about the country’s finances, but instead repeatedly pressed Truss about her future as prime minister.
They asked, pointedly, why she was sacking her chancellor for tax-cutting that roiled markets, when the plan was in fact hers. One reporter said, if Kwarteng had to go, “How come you get to stay?” Another queried, “What credibility do you have to keep governing?”
Truss admitted that “it is clear” that her economic plan “went further and faster than markets were expecting.” She explained: “So the way we are delivering our mission right now has to change” and “we need to act now to reassure the markets of our fiscal discipline.”
She stressed that her goal remains transforming Britain into “a low tax, high wage, high growth economy,” but she offered no answer to how this might be achieved.
She said, “my priority is ensuring our country’s economic stability,” when many economist say it is the Truss who created the current instability.
When Truss confessed, “I want to be honest, this is difficult, but we will get through this storm,” it was unclear whether she meant the British people or her government.
As she was walking out of the 10-minute, four-question news conference, a reporter shouted, “Aren’t you going to say ‘sorry?’ ” Truss kept walking.
The rapid unraveling of the Truss plan to bolster Britain’s future is remarkable and has…
Read More: U.K.’s Liz Truss fires Kwasi Kwarteng, reverses policies that sank pound