UK Prime Minister Liz Truss sacked the Treasury Chief Kwasi Kwarteng Friday in an effort to calm the markets in the wake of the U.K.’s contentious mini-budget.
“It is clear that parts of our mini-budget went further and faster than markets were expecting,” Truss said in a brief press conference.
What Happened: Truss abandoned her campaign promise to roll back her predecessor Boris Johnson’s increase in company tax, which is scheduled to go from 19% to 25%. This move is expected to fund the U.K. Treasury some £18 billion ($20.1 billion) by 2026.
Kwarteng was succeeded by Jeremy Hunt, a former health secretary and foreign secretary. Edward Argar took over as chief secretary to the treasury for Chris Philp.
Before Truss’ U-turn, gilts, or British government bonds, surged.
Nearly half of the tax-cutting measures outlined in Kwarteng’s mini-budget were abandoned. Hunt will now be responsible for delivering the government’s medium-term fiscal plan announcement and the independent estimates that go with it from the Office for Budget Responsibility (OBR).
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Why It Matters: The nearly £18 billion from the company tax U-turn, according to Truss, will serve as a down payment for that strategy, guaranteeing that public spending will increase at a slower rate than originally projected.
The strategy included the sale of long-dated gilts, which prompted the Bank of England to step in and prevent the collapse of pension funds, as well as an increase in mortgage rates for potential homebuyers.
After a challenging first five weeks in office, Truss was apparently the focus of a plot to have her removed by lawmakers from her own party.
Truss and Kwarteng had nevertheless maintained their public consistency this week, branding anyone who disagreed with the government’s drastic economic plans as a member of an anti-growth coalition.
Photo: Shag 7799 via Shutterstock
Image and article originally from www.benzinga.com. Read the original article here.