Speculation about Kwarteng’s future as chancellor started last night when he ended his trip to the US a day early to fly back to the UK.
Kwarteng is the second shortest-serving UK chancellor on record, after taking on the position just 38 days ago. Iain Macleod is the shortest-serving chancellor after he suffered a heart attack a month into his appointment.
Kwarteng’s dismissal comes amid speculation that prime minister Liz Truss will announce a u-turn on parts of the mini-budget today.
On his Twitter, Kwarteng published a letter to Truss, which states: “When you asked me to serve as your chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.”
He explains that “following the status quo was simply not an option”.
“The economic environment has changed rapidly since we set out the growth plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I commend my officials for their dedication.”
“It is important now as we move forward to emphasise your government’s commitment to fiscal discipline. The medium-term fiscal plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches,” he adds.
On 23 September, the former chancellor announced a flurry of new stamp duty thresholds on a permanent basis as part of his mini-budget.
The budget included a host of other tax cuts that were announced with the aim of boosting UK economic growth.
The cuts received a mixed reaction from the mortgage market with some suggesting it is one of the chancellor’s “crowd-pleasing tricks” while others suggest he “swung his axe boldly”.
In the days following Kwarteng’s tax-cutting statement, a range of large and small lenders have pulled all or part of their residential and buy-to-let loans.
Moneyfacts revealed that on 27 September, a record 935 home loans were withdrawn from the market, more than double the previous highest fall of 462 products on 1 April 2020 at the start of the pandemic lockdowns.
However, since the announcement, the government has reversed plans to cut the top 45p income tax rate after a storm of criticism.
On the u-turn, Kwarteng said “we get it” and that it had “become a distraction” from the government’s main economic policies.
At the time of the announcement, Shaw Financial Services founder Lewis Shaw noted that the government “should never have even attempted this policy in the manner they did”.
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