British Prime Minister Liz Truss has sacked Chancellor Kwasi Kwarteng and reversed parts of the disastrous ‘mini budget’ which has spooked markets and created chaos over the past two weeks.
Kwarteng resigned at Truss’s request, having returned from an IMF meeting in Washington – and Truss appointed former Health Secretary Jeremy Hunt in his stead.
Truss reversed a decision on corporation tax, which will now rise to 25% as previously planned, raising £18 billion pounds.
Truss said, “We need to act now to reassure the markets of our fiscal discipline.”
‘Black hole’ warning
Torsten Bell, chief executive of the Resolution Foundation, a think-tank, said, “The last two weeks have seen the announcement and unravelling of the worst unforced error in British economic policymaking for generations”.
Paul Johnson of the Institute for Fiscal Studies said that the reversal of the corporation tax rise was “unlikely to be enough by itself to plug fiscal gap. More than £20bn of tax cuts still in place”.
Johnson also commented that the tax cut was “probably least growth friendly option. If growth were the only consideration income tax and/or National Insurance would be going back up instead.”
‘Reckless approach’
Sir Keir Starmer, leader of the Labour party said, “Liz Truss’ reckless approach has crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage.
“Changing the chancellor doesn’t undo the damage made in Downing Street. We need a change in government.”
