Prime Minister Liz Truss has scrapped a key part of the mini-budget Kwasi Kwarteng produced last month—reversing the cut to corporation tax—and has defended her decision to replace him as Chancellor of the Exchequer with Jeremy Hunt.
She said she had decided corporation tax would go up from 19 percent to 25 percent next year—as originally planned by Rishi Sunak—which would raise £18 billion.
The City of London has reacted badly in the last three weeks to the mini-budget, which involved tax cuts of around £43 billion and a big increase in government borrowing.
On Oct. 3 Truss scrapped plans to abolish the top rate of income tax but that has not assuaged the financial markets.
But, on Friday, when asked by one journalist if it was fair that Kwarteng had gone but she remained considering they had been in “lockstep” on the mini-budget, she sidestepped the question and said it had been a “difficult decision” to replace him.
Truss said: “From day one I’ve been ambitious for growth. Since the financial crisis in 2008 the potential of this country has been held back by low growth.”
Reassuring Markets
Truss said: “It’s clear that parts of our mini-budget went further and faster than the financial markets were expecting. So we need to act now to reassure the markets on our fiscal discipline.”Kwarteng was ordered to fly home overnight from International Monetary Fund talks in Washington and was “asked to resign.”
In his resignation letter, Kwarteng praised her “dedication and determination” and said, “I believe your vision is the right one.”
Truss said she was “sorry to lose him” but she praised Hunt as “one of the most experienced and widely respected government ministers and parliamentarians.”
