UK PM removed Finance Minister Kwasi Kwarteng following market chaos and tax-cutting plans

October 17, 2022: -On Friday, British Finance Minister Kwasi Kwarteng was fired after less than six weeks amid mounting political pressure and market chaos.

“The economic environment has changed since we set out the Growth Plan on September 23. Together with the Bank of England and excellent officials at the Treasury, we have answered to those events. I comment my officials for their dedication,” Kwarteng is saying in his resignation letter following being asked to step down.

“It is important to emphasize your government’s commitment to financial discipline as we move forward. The Medium-Term Financial Plan is crucial to this future, and I look forward to supporting you and my successor to adapt that from the backbenches.”

Jeremy Hunt was announced as Kwarteng’s successor. Chris Philp, chief secretary to the Treasury, was also replaced by Edward Argar.

Prime Minister Liz Truss is set to announce that the government will abandon key financial policy pledges laid out in Kwarteng’s controversial “mini-budget” on September 23, which include vast quantities of unfunded tax cuts.

Among the policies on the chopping block are Kwarteng’s pledge to reverse predecessor Rishi Sunak’s corporation tax hike from 19% to 25%, estimated to cost around £19 billion by 2026, and a 1.25% cut to dividend tax.

Earlier this month, the government canceled its plan to scrap the top income tax rate after a substantial public backlash, but this failed to quell market turbulence.

On Thursday, Kwarteng cut short a visit to Washington to fly back to London as government ministers ran to address the market chaos unleashed in recent weeks.

This contained a sell-off of long-dated government bonds that led the Bank of England to intervene to save pension funds from collapse and a spike in mortgage rates for future homeowners.

Truss is under immense pressure to rethink her economic policies, with opinion polls that indicate support for the ruling Conservative Party collapse and lawmakers from within her party reportedly plotting to oust her after a tumultuous five weeks in office.