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UK Treasury Chief kwarteng out of Government

UK Treasury Chief kwarteng out of Government

Newslooks- LONDON (AP)

Embattled British Prime Minister Liz Truss has parted ways with her Treasury chief ahead of a hastily arranged news conference on Friday as she struggled to calm markets and hang on to her job following the release of her controversial economic plan.

Britain’s Chancellor of the Exchequer Kwasi Kwarteng speaks to the media ahead of the Conservative Party annual conference at the International Convention Centre in Birmingham, England, Monday, Oct. 3, 2022. The British government has dropped plans to cut income tax for top earners, part of a package of unfunded cuts that sparked turmoil on financial markets and sent the pound to record lows. (Aaron Chown/PA via AP)

Sky News and the BBC reported that Kwasi Kwarteng was ousted, but it was unclear if he was fired or resigned.

It comes after a month in the job — and three weeks after he announced a tax-cutting “mini budget” that sent the pound plunging to record lows against the dollar.

Kwasi Kwarteng’s departure comes after just over a month in the job — and three weeks after he announced a tax-cutting “mini budget” that sent the pound plunging to record lows against the dollar.

FILE – Britain’s Prime Minister Liz Truss, foreground and Chancellor of the Exchequer Kwasi Kwarteng look on, during a visit to a construction site for a medical innovation campus, on day three of the Conservative Party annual conference at the International Convention Centre in Birmingham, England, Tuesday, Oct. 4, 2022. British media say Treasury chief Kwasi Kwarteng has left the government, ahead of an announcement by Prime Minister Liz Truss on changes to an economic package that sparked market turmoil. (Stefan Rousseau/Pool Photo via AP, File)

Kwarteng tweeted his departure letter to Truss, saying “You have asked me to stand aside as your Chancellor. I have accepted.”

He defended the government’s economic plan, saying the country faces an “incredibly difficult” situation and “following the status quo was not an option.”

Britain’s Chancellor of the Exchequer Kwasi Kwarteng arrives in Downing Street after returning from the US, in London, Friday, Oct. 14, 2022. The British government says Prime Minister Liz Truss will hold a news conference Friday as she faces pressure to U-turn on an economic package that sparked market turmoil. The announcement comes after Treasury chief Kwasi Kwarteng cut short a visit to Washington to fly back to London for crisis talks. (Stefan Rousseau/PA via AP)

Truss is due to hold a news conference later Friday. She is under intense pressure to scrap some of the 43 billion pounds ($48 billion) in unfunded tax cuts that roiled financial markets and led the Bank of England to step in to prevent a wider economic crisis.

Senior members of the Conservative party were publicly advising the government to take action. The pound rose as much as 1.7% against the dollar on Thursday and bond markets stabilized amid expectations that Truss and Kwarteng, whose formal title is chancellor of the Exchequer, will revise their economic growth plan.

Britain’s Chancellor of the Exchequer Kwasi Kwarteng, second left, arrives at London Heathrow Airport after travelling on a flight from the US, Friday Oct.14, 2022. The British government says Prime Minister Liz Truss will hold a news conference Friday as she faces pressure to U-turn on an economic package that sparked market turmoil. The announcement comes after Treasury chief Kwasi Kwarteng cut short a visit to Washington to fly back to London for crisis talks. (Andrew Matthews/PA via AP)

Truss, a free-market libertarian, came to power last month pledging to cut taxes to spur growth. But her ability to deliver on that commitment is now in doubt.

Analysts suggest the most likely change in her program would be to abandon a promise to halt her predecessor’s plan to increase corporation tax from 19% to 25%. That would reduce the bill for her program by about 18 billion pounds a year.

A policeman waits to enter 10 Downing Street in London, Friday, Oct. 14, 2022. Britain’s Chancellor Kwasi Kwarteng is returning early from an IMF meeting in the US, as senior member of the U.K. government on Thursday rejected suggestions that Prime Minister Liz Truss should step down after lawmakers from her own party criticized Truss for economic policies that have sparked turmoil on financial markets. It is reported that a number of measures in the recent mini-budget may have to be reversed to calm the markets .(AP Photo/Kirsty Wigglesworth)

James Athey, the investment director at abrdn, said that it now seemed certain that the government “is about to U-turn on its decision not to U-turn on its profligate tax-cutting policies.″ The rumors are calming markets, he said.

A policeman on guard duty walks past the front door of Downing Street in London, Friday, Oct. 14, 2022. Britain’s Treasury chief Kwasi Kwarteng is dashing back to London for urgent talks with Prime Minister Liz Truss amid growing expectations that they will scale back unfunded tax cuts to calm financial markets and quell a burgeoning revolt by members of their own party.(AP Photo/Kirsty Wigglesworth)

“The risk now is that investors have forgotten that there are significantly more problems than just an ill-advised and ill-timed fiscal easing to deal with,″ he said. “Inflation is at multi-decade highs, government borrowing is huge as is the current account deficit. The housing market is likely to suffer a hammer blow from the jump in mortgage rates and the war in Ukraine rumbles on. We may well be through the worst of the volatility but I fear that the U.K. is nowhere near out of the woods.”

British Chancellor of the Exchequer Kwasi Kwarteng, left, and British Prime Minister Liz Truss at the Conservative Party annual conference at the International Convention Centre in Birmingham, England, Sunday Oct. 2, 2022. (Stefan Rousseau/PA via AP)

Conservative lawmakers are agonizing over whether to try to oust their second leader this year. Truss was elected last month to replace Boris Johnson, who was forced out in July. Some reports suggest senior Conservatives are plotting to replace Truss with a joint ticket of Rishi Sunak and Penny Mordaunt, her two closest rivals in the summer contest for leadership of the party, though it’s unclear how that could be achieved.

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