After returning to London from meetings in Washington, D.C., Britain’s finance minister Kwasi Kwarteng was abruptly removed from his position.
Liz Truss, the country’s prime minister, addressed the public on Friday afternoon to reassure the financial community and members of her own Conservative Party about her new administration’s commitment to fiscal responsibility.
Britain's Prime Minister Liz Truss has fired her finance minister and canceled a planned tax cut for the country's highest earners — efforts designed to calm financial markets and her own conservative party.https://t.co/y3Y3OHSmIP
— NPR (@NPR) October 14, 2022
As a result of criticism from lawmakers in her party, political rivals, international economists, and investors who have continued to sell off their British assets, Truss has attempted to turn the situation around to some extent by canceling the planned tax cut for Britain’s highest earners. However, she has come under constant pressure to abandon additional plans for similar measures.
[bs-quote quote=”When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices….However, your vision of optimism, growth and change was right.” style=”default” align=”left” color=”” author_name=”Kwasi Kwarteng ” author_job=”Resignation letter of the British finance Minister” author_avatar=”” author_link=””][/bs-quote]
Kwarteng left early from Washington, D.C., Thursday evening, where he had been meeting with international counterparts as part of a meeting of the International Monetary Fund, a sign of the widespread concern within her government about the need to rethink the economic strategy of major tax cuts, one of the key components of her leadership campaign this summer. Soon after his return to London, he and Truss had urgent discussions there.
This morning, as investors in the financial markets were more certain that Truss would take some sort of action, confidence appeared to return in the form of purchases of U.K. government debt, which had the effect of decreasing the cost of borrowing for the government.
Before her public statement, Truss’s office and supporters had frequently stated that she will not alter her overall strategy for reviving the economy and that she and Kwarteng had kept cooperating to achieve their shared objective.