The British Prime Minister is sacking her finance minister just five weeks after taking office. She had defended his radical tax plans shortly before. The successor is ex-Secretary of State Hunt. But Truss himself has long had his back to the wall.
Jeremy Hunt is the new UK Treasury Secretary. Prime Minister Liz Truss appointed the former foreign and health secretary to succeed Kwasi Kwarteng, whom she had recently sacked. The previous chairman of the health committee in the British Parliament had applied for the head of the Conservative Party in the summer, but had failed after a few ballots. During the pandemic, the 55-year-old has been one of the government’s harshest critics. Hunt is known for his faux pas. During a visit, he described Slovenia as a former vassal state of the Soviet Union. In China, he wanted to impress with his native wife, but accidentally said she was from Japan.
Kwarteng had failed after just 38 days in office. Observers see his dismissal as an attempt by Truss to save her own political career. After only five weeks in office, the head of government is already under heavy criticism. Your economic policy is already considered a failure: an enormous turnaround was expected on Friday. Truss and Kwarteng had announced far-reaching tax cuts that were to be financed solely on credit.
The financial markets reacted violently after the announcement in September without a plan for counter-financing. The pound plummeted against the US dollar. The Bank of England has had to intervene and buy government bonds on several occasions to stop their price falls and prevent pension funds from collapsing. 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. Most recently, central bank chief Andrew Bailey announced an end to bond purchases for today, 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.
