UK finance minister sacked amid market turmoil: Reports

Friday, 14 October 2022 (18:05 IST)
The UK's Chancellor of the Exchequer Kwasi Kwarteng made an early return from the United States on Friday for urgent talks with Prime Minister Liz Truss about economic policy.

According to the UK's Times newspaper, Kwarteng was set to be sacked soon after arriving back in London.

The pair are scrambling to reassure markets and lawmakers after a September 23 tax-cutting "mini-budget" that plunged the UK into economic maelstrom.

What do we know so far?

Kwarteng returned to the UK to continue work on his government's medium-term financial plans.

Before leaving annual talks withthe International Monetary Fund in Washington, Kwarteng insisted he was safe in his role as finance minister.

However, Truss had reportedly already been seeking a replacement finance minister to stave off threats to her own job. It is expected that a U-turn on that budget is to be announced later on Friday.

According to British media reports, Truss was considering reversing further aspects of her government's controversial plans, which sparked market turmoil when they were announced.

In September, Kwarteng announced tax cuts — twinned with heavy borrowing — that spooked markets.

That announcement sent interest that the government would have to pay on borrowing soaring. Meanwhile, the pounds sterling slumped to a record low against the US dollar.

The UK government has already abandoned its intention to cut taxes for the highest earners. Multiple media reports have also suggested Truss and Kwarteng are about to reverse a decision to halt a rise in business tax.

What might happen next?

The UK's central bank has moved to reassure investors, including pension funds, that have lent money to the UK government.

The Bank of England began an emergency purchase scheme of government debt bonds at the end of September, hoping to stave off a market collapse. However, those efforts are set to end on Friday.

The financial and political chaos has fueled speculation about whether Truss can survive in office after less than 40 days as prime minister.

Truss — the fourth prime minister in six years in Britain — was elected by members of the Conservative Party rather than the broader UK electorate.

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