Truss makes another U-turn, fires Kwarteng

On Friday, UK Prime Minister Liz Truss relieved Chancellor of the Exchequer Kwasi Kwarteng only 38 days into his tenure, replacing him with former Health and Foreign Secretary Jeremy Hunt. In a briefing after the decision, Truss said she would raise the corporate tax rate — reneging on a promise not to do so — by £18 billion ($20 billion) and admitted that her budget “went further and faster than markets were expecting.” Her announcement triggered a sell-off in the gilt market, as yields on long-term UK government bonds rose sharply, with more trouble expected on Monday. Analysts and traders assessed that the measures were not enough. The turmoil began three weeks ago, when now-sacked Chancellor Kwarteng led the new government’s charge to promise tax cuts without a plan to fund them, which sent the pound tumbling and the markets into a tizzy, leading to global criticism against Truss and her cabinet. Hunt, the new man in and an anti-Brexit “remainer,” has a tough gig ahead: he’s not just following the shortest chancellorship since 1970, or managing the reversal of the tax-cut plan to calm the markets – which had already anticipated the U-turn — but he’s also got to deal with a boss who's trying to keep her own job. Eurasia Group’s lead Europe analyst Mujtaba Rahman says that more than two dozen Tory MPs — including some of Truss’s original supporters — are planning to remove her from office before 2023. When asked today why she’s not resigning, Truss said: “My priority is making sure we deliver the economic stability that our country needs.”