Truss sacrifices the economy minister and backs down on fiscal plan to stay in office

First modification: 10/15/2022 – 03:46

Looking to stabilize the ship. After 38 days at the helm of the British Executive, Liz Truss is up against the wall for the financial markets and for her own colleagues in the Conservative Party. The massive tax cut plan Kwarteng unveiled on September 23 set off an economic storm that has so far been impossible to stop.

But even though Truss based his entire Conservative primary campaign to succeed Boris Johnson on the tax plan, he now had to drop Kwarteng from the cabinet to placate investors wary of the country’s financial direction.

Kwarteng made it clear that he had been fired and not that he had resigned of his own volition. “We have been colleagues and friends for many years. During that time, I have seen your dedication and determination. I think your vision is the right one. It has been an honor to serve as your first ‘chancellor’,” the economy minister wrote with less time. in office in UK history.

The new holder of the portfolio, Jeremy Hunt, represents the “establishment” that Truss claims to fight against and sends a certain message of normalization and experience to the markets. Having twice unsuccessfully aspired to lead the Conservative Party, in 2019 and 2022, Hunt takes office with the idea of ​​providing financial stability.

For almost a decade, Hunt was at the helm of the Ministries of Culture, Health and Foreign Affairs, although his presence in the cabinet ended after his defeat by Boris Johnson in the ‘Tory’ leadership race in 2019.

“It is clear that parts of the ‘mini-budget’ went further and faster than the markets expected,” Truss said in a 180-degree correction of what she had promised since she became prime minister on Sept. 6.

Truss maintained the increase in corporate tax from 19% to 25% that the previous Executive of Boris Johnson had announced, despite having promised to cancel the increase. The increase will allow to raise about 20,700 million euros, which will be used for medium-term debt.

Truss was surprised by the brevity of his intervention before the press in the face of questions that questioned his continuity in Downing Street.

“We have to act now to assure the markets that we are fiscally responsible,” he said, before adding that he would do “whatever it takes” to get debt to fall in the medium term.

The International Monetary Fund applauded that London is going to “recalibrate” its fiscal plan and expressed confidence in Truss’s commitment to economic stability, but the greatest danger for the prime minister will continue to be her own fellow members, many of whom are dissatisfied with the direction of the Executive.

with EFE