British Prime Minister Liz Truss fired her Finance Minister Kwasi Kwarteng on Friday, shortly before she is expected to scrap parts of their economic package in a bid to survive the market and political turmoil gripping the country.
Kwarteng said he had resigned at Madam Truss’s request after rushing back to London overnight from International Monetary Fund (IMF) meetings in Washington.
Madam Truss, in power for only 37 days, would hold a news conference later on Friday, Downing Street confirmed.
“You have asked me to stand aside as your Chancellor. I have accepted,” said his resignation letter to Truss, which Kwarteng published on Twitter.
British government bonds rallied further ahead of Truss’s statement, adding to their partial recovery since her government started looking for ways to balance the books after her unfunded tax cuts crushed UK asset values and drew international censure.
Kwarteng is the country’s shortest serving chancellor since 1970, and his successor will be the fourth finance minister in as many months in Britain, where millions are facing a cost-of-living crisis.
The British Finance Minister with the shortest tenure died.
Kwarteng had announced a new fiscal policy on September 23, delivering Madam Truss’s vision for vast tax cuts and deregulation to try to shock the economy out of years of stagnant growth.
But the response from markets was so ferocious that the Bank of England had to intervene to prevent pension funds from being caught up in the chaos, as borrowing and mortgage costs surged.
The duo have since been under mounting pressure to reverse course, as polls showed support for their Conservative Party had collapsed, prompting colleagues to openly discuss whether they should be replaced.
Having triggered a market rout, Madam Truss now runs the risk of bringing the government down if she cannot 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.
Her search for savings will be made harder by the fact the government has been cutting departmental budgets for years.
At the same time the Conservative Party’s discipline has all but broken down, fractured by infighting as it struggled first to agree a way to leave the European Union and then how to 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.”