Two weeks ago I wrote an article about ‘what has happened since Kwasi Kwarteng’s mini-budget.’ The situation at the time seemed incredulous enough – skyrocketing mortgage rates, the pound plummeting, a cancelled rise in corporation tax, and 33-point lead by the opposition. Perhaps more incredible is how the situation has evolved since then – today Kwasi Kwarteng has been asked to resign by Liz Truss in favour of Jeremy Hunt, and we’ve seen a press conference U-turning on the rise in corporation tax. The now ex-Chancellor returned early from the US, cutting his meetings with the IMF (International Monetary Fund) short – meetings in which he insisted the UK was sticking to their plans and would reap the benefits. Embarrassingly, he was called back to be sacked.
Along with Kwarteng, the Chief Secretary to the Treasury Chris Philp, was moved to the Cabinet Office, and replaced by Edward Argar – the MP for Charnwood in Leicestershire since 2015. Philp had been widely seen as the leading advocate of the decision to scrap the 45p tax rate for the highest earners. The new Chancellor and Chief Secretary will, according to Truss, work to reassure the markets of the country’s ‘fiscal discipline,’ and focus on the debt falling in the medium term.
In a press conference held this afternoon, the prime minister explained that her ‘conviction that this country needs to go for growth is rooted in [my] personal experience,’ and envisions a country where people can have steady jobs, businesses can be set up, and families can generally have good lives. In an attempt to explain the U-turn and take the heat off the new government that remains in its infancy, Truss argued that since 2008 the country has been held back by consistently low growth, and there are now external forces including Putin’s war in Ukraine, and the amassing of debt due to the Covid-19 pandemic that explain the current state of affairs.
She went on to not apologise for the turmoil – in fact, there was no sense of remorse or apology in the speech – but explain that the mini budget went ‘further and faster’ than markets were expecting, hence the reactions seen. She further stated that the priority of the government now is to ensure the country’s economic stability. The most insightful statement from Truss came towards the end, where she shared the shocking truth that, ‘to be honest, this is difficult.’ Evidently acting as prime minister isn’t as easy as Boris Johnson may have made it seem.
The reactions from the press summed up many of the wide reactions over Twitter and from MPs – Conservative and Labour alike. The Sun’s Harry Cole pointed to Liz Truss’s earlier statement that her and the ex-Chancellor had developed the mini-budget in lockstep and queried why, if he has had to leave because of it, she gets to stay. Equally as poignantly, Robert Peston simply asked if she would apologise to her party – evidently, the answer was no.
As to be expected, Twitter was in a frenzy, with even Larry the Cat (Number10cat) getting involved.
Others had fun tracking Kwarteng’s flight back to his fate, noting the number of U-turns taken before landing.
As it is a Friday afternoon, the full extent of the market reaction is likely to not be seen immediately, however, the pound has fallen 1.2% to $1.1187. The conference is unlikely to have had the intended effect, with the government bond rally that was occurring before the speech fading, and reports of more MPs calling for her resignation. With Jeremy Hunt appointed as the 4th Chancellor in just over three months, this does not come as a surprise.
