According to the media, British Prime Minister Liz Truss has fired her finance minister, Kwasi Kwarteng. This was reported by several British media such as the BBC and Sky News channels as well as the newspapers “Times” and “Sun” in London on Friday. The move comes just ahead of an expected reversal in the government’s planned tax plans. Just over five weeks after taking office, Truss is under massive pressure in her own party.
The Prime Minister wants to appear before the press in the afternoon. It is expected to roll back large parts of its recently announced tax plans that have led to major economic turmoil.
Controversy over planned tax cuts
The financial markets had reacted violently after the announcement of significant tax cuts without a counter-financing plan in September. The pound plummeted against the US dollar. The Bank of England has had to intervene and buy government bonds on several occasions in order to withstand the fall in their prices and to prevent the collapse of pension funds. Rising interest rates on home loans exacerbated the cost of living crisis for many homeowners.
The government then withdrew the planned abolition of the top tax rate and, after some hesitation, announced that it would bring forward the presentation of the entire budget by a few weeks. But that only calmed the financial markets temporarily.
Fed chief Andrew Bailey recently announced an end to bond purchases for this Friday. According to some experts, he wanted to force the government to give in. Financial markets reacted positively to reports of a government reversal.
It is questionable whether Truss will be able to calm the financial markets and consolidate their position with the dismissal of their Chancellor of the Exchequer and the expected reversal. British media have already speculated that her party could soon overthrow her.
