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Liz Truss’ Big Move After Firing Finance Minister Over UK Tax Cut Fiasco

London:

British Prime Minister Liz Truss on Friday fired her Chancellor of the Exchequer and left the main shelf of her right-wing economic platform, fighting to save her new government while the unruly Conservatives plotted her own demise.

At her first press conference since succeeding Boris Johnson on Sept. 6, Truss insisted she had acted “decisively” to bring about “economic stability,” but the pound resumed its decline in foreign exchange markets, falling below $1.12.

“We’re going to get through this storm,” she said, answering just four questions, giving short answers, and getting a reporter to yell as she left, “Aren’t you going to say sorry?”

Truss declined to comment on whether she retains any credibility after she fired Kwasi Kwarteng as finance minister for carrying out her own agenda.

“I want to create an economy with low taxes, high wages and a fast-growing economy,” she said. “That mission remains.”

Kwarteng, who had returned early from international meetings in Washington, was replaced this year by centrist former Foreign Secretary and Tory leadership candidate Jeremy Hunt as Britain’s fourth chancellor.

The financial turmoil sparked by the new government’s Sept. 23 plan to cut taxes — funded by billions in more loans — had eased somewhat since the Bank of England intervened in bond markets.

But the central bank was adamant it would end bond buying on Friday, and market analysts said only a bigger pullback by Truss after Kwarteng’s disastrous budget announcement last month would prevent new panic.

She duly brought about the turnaround by announcing that she would uphold the Johnson government’s plan to raise corporate income taxes — after already changing her mind about lowering income taxes for the highest earners.

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The promised tax reforms were the centerpiece of Truss’ successful pitch to Tory party members that she was the best candidate to replace Johnson, rather than Rishi Sunak.

That program is now in tatters, and Truss’ judgment is being questioned more than ever, after Sunak’s warnings were fully justified: higher loans to pay tax cuts only served to scare markets and cost millions of Britons. to drive.

UK 10-year Treasury yields fluctuated during afternoon trading.

Collapsing Polls

A new YouGov poll for The Times newspaper said 43 percent of Conservative voters want a new Prime Minister in Downing Street.

Other polls show a massive build-up to the opening for the main opposition Labor party, which threatens electoral collapse for the Tories.

Labor leader Keir Starmer said dumping Kwarteng “wouldn’t undo the damage in Downing Street”.

“Liz Truss’ reckless approach has caused the economy to crash, sending mortgages skyrocketing, and undermining Britain’s position on the world stage,” he said.

Tony Travers, of the London School of Economics, told AFP that Kwarteng had been made “the cheat for the government’s mistakes”, but the firing had not pressured Truss or calmed the Tories.

“It’s very hard to see them come back from this” in the next election, he added.

‘adhesive plaster’

Kwarteng is said to have stayed in Washington this weekend to conclude the annual meetings of the International Monetary Fund and the World Bank after being reprimanded by IMF chief Kristalina Georgieva over the need for “coherent and consistent” policies.

Speaking in Washington on Thursday, Kwarteng had insisted his job was safe. “I’m not going anywhere,” he said.

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But British broadcasters showed live footage of Kwarteng’s British Airways plane landing at Heathrow airport the day before, after Truss held hasty meetings with her own financial advisers in his absence on Thursday.

Multiple reports said senior Tory MPs were planning to overthrow Truss by installing a new leadership team under Sunak and Penny Mordaunt, who also ran to succeed Johnson.

Party greats could move next week, senior BBC journalist Nick Watt tweeted.

“They said it was untenable for him to remain prime minister after the resignation of @KwasiKwarteng, who ran the program that gave her Tory leadership,” he wrote.

Analysts noted that even with the new turnaround, Truss’s reform package was still reliant on unfunded £25bn tax cuts.

“Writing was on the wall as markets rose in anticipatory delight at the news that another post-budget turnaround was imminent and corporate tax measures have been instrumental in bolstering sentiment today,” financial analyst said. Danni Hewson of AJ Bell.

“But it’s a band-aid that’s already curling around the edges,” she added.

(Except for the headline, this story has not been edited by NDTV staff and has been published from a syndicated feed.)

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