Related: Kwasi Kwarteng refuses to comment on possible corporation tax U-turn
Liz Truss has appointed former foreign secretary Jeremy Hunt as the new chancellor of the exchequer and performed a U-turn on corporation tax after she dramatically sacked Kwasi Kwarteng, who paid the price for the chaos unleashed by his mini-Budget.
The appointment of former Conservative leadership contender Jeremy Hunt signals a major shift in policy direction and an attempt to restore stability after weeks of turmoil in the wake of Mr Kwarteng’s mini-budget.
The prime minister also sacked Treasury chief secretary Chris Philp.
The U-turn is a major change to Mr Kwarteng’s £43 billion tax giveaway that caused weeks of turbulance in the markets and sent the pound into freefall.
The then-chancellor cut short his attendance at the International Monetary Fund’s annual meeting in Washington to be told of his fate in a brief meeting with the Prime Minister.
On Thursday, Mr Kwarteng had assured reporters that he was “100 per cent” going to be continuing in the job.
The government was under pressure to perform a U-turn on the mini-Budget measures today to avoid fresh market panic on the day the Bank of England ends its bond-purchasing scheme.
Hunt ‘briefly shuts wife out of house’
New chancellor Jeremy Hunt briefly shut his wife out of the house to avoid speaking to reporters as he arrived home, it’s been reported.
Mr Hunt arrived home in Pimlico, London, in a black cab with his wife, Lucia.
When asked what he hoped to achieve as Chancellor, he said: “We’ll have lots of chances to talk later.”
He did not reply when asked: “Do you think Liz Truss has any credibility?”
William James, from Reuters, said Mr Hunt had briefly closed the door on his wife.
Scottish leader urges Truss to quit
Scotland’s First Minister has called on the Prime Minister to stand down after she sacked her chancellor and U-turned on a key policy pledge.
Nicola Sturgeon urged the PM to quit, adding that if she refuses, her MPs should back an election.
“The best thing Liz Truss could do for economic stability now is resign,” she said.
“Her decisions have crashed the economy and heaped misery on people already struggling with a cost-of-living crisis.
“The only decent thing for Tory MPs to do now is call time on her government and allow an election.”
Scottish Labour leader Anas Sarwar said “11th hour U-turns and scapegoating” will not be enough to save Ms Truss.
“It’s not just Kwasi Kwarteng that needs to go. We need to remove all those that were involved in putting together this disastrous plan, and everyone that signed it off – not just the guy who read it out.
“It’s time to remove this economically illiterate and morally bankrupt Tory party from government.”
Inflation will erode public spending, says expert
The director of the Institute for Fiscal Studies said higher inflation meant public spending could not be increased much less quickly “without actually going down’’.
Paul Johnson tweeted: “Liz Truss just said she will ensure spending increases less quickly than previously planned. Higher inflation has already eaten into plans set out a year ago. Can’t increase much less quickly without actually going down.’’
Opinion: Yes, Labour is now on an election footing. Do you blame us?
There is a palpable sense – in the last month or so – of excitement, too, writes MP Jess Phillips.
This energy characterises the lead up to an election. It is not necessarily practical or tangible yet; but there is a feeling in the air of urgency and anticipation:
Yes, Labour is now on an election footing. Do you blame us? | Jess Phillips
The chancellor sacked, a U-turn on the mini-Budget expected – of course Labour is preparing to take office
Sacking chancellor does not undo the damage, says Starmer
Labour leader Sir Keir Starmer said Kwasi Kwarteng’s sacking did not “undo the damage” already inflicted.
He tweeted: “Changing the chancellor doesn’t undo the damage made in Downing Street.”
Public spending will still have to be cut by up to £40bn, says expert
An expert predicts the UK will still face up to £40bn of public spending cuts after Ms Truss’s corporation tax U-turn.
More than half of the planned tax cuts are still going ahead, said Torsten Bell, of the Resolution Foundation think tank.
He said he was “100% certain” a big cut to public investment was coming.
Previously, the black hole in public finances had been put at £60bn.
Truss refuses to apologise at 7-minute press conference
Liz Truss has refused to apologise for problems created by her economic policies, after making a U-turn on more of her mini-Budget.
The prime minister left a planned press conference after just seven minutes and four questions, reports Jon Stone:
Liz Truss refuses to apologise for tax cut debacle at 7 minute press conference
Liz Truss has refused to apologise for problems created by her economic policies, after U-turning on yet more of her budget.
Who is the UK’s shortest-serving chancellor?
Kwasi Kwarteng is among Britain’s shortest-serving chancellors. See where he ranks:
UK’s shortest-serving chancellors as Kwasi Kwarteng sacked after just 38 days
Mr Kwarteng joins unfortunate list of chancellors who didn’t last long in one of the most important jobs in government
Corporation tax U-turn will raise £18bn a year, says Truss
Liz Truss said in her statement: “It is clear that parts of our mini-budget went further and faster than markets were expecting. So the way we are delivering our mission right now has to change.
“We need to act now to reassure the markets of our fiscal discipline.
“I have therefore decided to keep the increase in corporation tax that was planned by the previous government.
“This will raise £18 billion per year. It will act as a down payment on our full medium-term fiscal plan, which will be accompanied by a forecast from the independent OBR.
“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”
The prime minister was slated for not producing an OBR forecast with the mini-Budget.
