UK’S TRUSS FIRES FINANCE MINISTER IN TAX CUTS POLICY

LONDON—British Prime Minister Liz Truss fired her finance minister Kwasi Kwarteng on Friday, shortly before she is expected to scrap parts of their economic package in a bid to survive the market and political turmoil gripping the country.

Kwarteng said he had resigned at Truss’ request after rushing back to London overnight from IMF meetings in Washington. Truss has been in power for only 37 days.

“You have asked me to stand aside as your Chancellor. I have accepted,” said Kwarteng’s resignation letter to Truss.

British government bonds rallied further ahead of Truss’ statement, adding to their partial recovery since her government started looking for ways to balance the books after her unfunded tax cuts crushed UK asset values and drew international censure.

Kwarteng is the country’s shortest serving chancellor since 1970, and his successor will be the fourth finance minister in as many months in Britain, where millions are facing a cost of living crisis. The British finance minister with the shortest tenure died.

Shocked out of stagnation

Kwarteng had announced a new fiscal policy on Sept. 23, delivering Truss’ vision for vast tax cuts and deregulation to try to shock the economy out of years of stagnant growth.

But the response from markets was so ferocious that the Bank of England had to intervene to prevent pension funds from being caught up in the chaos, as borrowing and mortgage costs surged.

The duo have since been under mounting pressure to reverse course, as polls showed support for their Conservative Party had collapsed, prompting colleagues to discuss whether they should be replaced.

Having triggered a market rout, Truss now runs the risk of bringing the government down if she cannot find a package of public spending cuts and tax rises that can appease investors and get through any parliamentary vote in the House of Commons.