Liz Truss Appoints Jeremy Hunt Finance Minister and Withdraws UK Tax Cut

British Prime Minister, Liz Trussdismissed this Friday his finance minister and great ally Quasi Quartengbut insisted on applying, barely modified, the economic plan at the origin of a political storm that threatens its own continuity.

We have to act now to calm the markets,” the Conservative leader said, very tense, in a press conference of less than 10 minutes in London.

To do this, the head of government, who took office a little over a month ago, agreed to capitulate once again and announced that she will increase corporate tax, a measure of the previous government that she was determined to abolish.

However, she declared herself “absolutely determined” to carry through with the rest of her plan for tax cuts, to “deliver stronger growth, a more prosperous UK and ride out the storm”.

In an extremely volatile market, political instability weighed on sterling again on Friday, which depreciated 1.20% against the dollarup to $1.1188 per unit.

British financial markets have been shaken by great nervousness since the September 23 Truss y Kwarteng They presented a package of measures that foresees important public aid and tax cuts, but nothing to finance it.

As a result, interest rates on British government bonds soared to record levels, forcing the Bank of England to intervene by buying long-term bonds.

The central bank – an entity independent of the government – sought to stop the rise in interest, but failed and when it announced that it would not prolong purchases beyond this Friday, it created even more chaos in the markets.

In this tense context, Kwarteng, a 47-year-old ultra-liberal born in London to Ghanaian immigrant parents, was pushed out of office to try to save Truss’s.

The prime minister “has asked me to step aside as her finance minister. I have accepted,” she wrote in a letter posted on Twitter after rushing back from Washington, where she was to attend the International Monetary Fund’s annual meetings. IMF) and the World Bank.

Calm the crisis of confidence

Kwarteng was immediately replaced by former Foreign and Health Minister Jeremy Hunt.

One of the most serious figures, although not very charismatic, among the candidates who competed for the Conservative leadership in July, Hunt, 55, enjoys popularity among a part of the Conservative MPs.

According to the British press, numerous members of the Conservative Party are already trying to remove Truss, in the face of disastrous polls that predict a crushing defeat for the right in the upcoming legislative elections.

These are scheduled for January 2025 at the latest, but the political and economic storm caused by her controversial tax cuts seems to make it impossible for the Conservative leader to stay in power until then.

Truss, 47, arrived at Downing Street on September 6. He succeeded the controversial Boris Johnson, forced by his own ranks to resign as a result of a multiplication of scandals that ruined his popularity.

But just a month later, the new Conservative leader had turned against the markets, voters and prominent personalities from her own party.

Under pressure from the formation, Truss and Kwarteng already had to capitulate in early October on one of their most controversial measures.

It was about the abolition of the maximum tax bracket, 45%, for income above 150,000 pounds (170,000 dollars) per year, accused of favoring the rich when many Britons sink into poverty weighed down by inflation that is already close to 10 % and should continue to increase.

Also seeking reassurance, Kwarteng later agreed to advance the publication of its budget forecasts to October 31, instead of the November 23 initially announced.

But it was not enough.

The presentation will now be carried out by Hunt. And Truss will have to show if the change of head in the Finance portfolio is enough to contain the crisis of confidence.