Kwasi Kwarteng has been asked to step down by Liz Truss, Prime Minister of Britain. The news was confirmed by the ex-minister himself on a post by him on social media. Former foreign minister Jeremy Hunt, who reportedly belongs to the moderate faction of the Tories is the new Finance Minister. Kwarteng, who is a loyal friend of Truss, said that he believed in her vision and had agreed to stand aside.
At a news conference at Downing Street, PM Liz Truss said that she was scrapping plans that had been announced earlier, in the mini-budget that had been presented by the then Chancellor Kwasi Kwarteng. The plan to reverse an increase in business taxes has been dropped and this will save the government from having to borrow $20 billion.
The U-turn on discredited economic strategy might help her save her political seat as the earlier mini-budget that they had proposed was panned by almost everybody including:
many of her Conservative party members
the markets
the Labour Party, who is the opposition and
the IMF.
Truss told reporters that it had become clear that parts of their “mini-budget” had gone “further and faster than markets were expecting.”
The rethink by the Conservative government has been welcomed by the markets. Bond prices rose and the 30-year UK government debt yield fell to 4.3 percent. After the announcement of the mini-budget, the yield had risen to 5 percent leading to an unprecedented bond buy-back intervention by the Bank of England.
On September 26, the pound had also fallen to near $1.03. This historic pounding has also eased and the pound is now trading at $1.12.
Jeremy Hunt is the former foreign minister and is expected to quell the worries within the party. He is the fourth finance minister in little more than three months. He has a tough job ahead as he has to reassure the many who are worried about the economic direction in which the UK is traveling.
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