On Friday, British Prime Minister Liz Truss sacked her finance minister and abandoned the key part of her right-wing economic platform, struggling to save her new government as restless Tories plotted her own demise.
At her first press conference since taking over from Boris Johnson on September 6, Truss insisted she had acted ‘decisively’ to bring ‘economic stability’ – but the pound resumed its fall in the currency markets, falling below $1.12.
Truss declined to say whether she retained any credibility after sacking Kwasi Kwarteng as Chancellor of the Exchequer for carrying out her own agenda.
Kwarteng, who rushed early from international meetings in Washington, was replaced by former centrist foreign secretary and Conservative leadership candidate Jeremy Hunt as Britain’s fourth chancellor this year.
But the central bank insisted it would end its bond-buying spree on Friday, and market analysts said only a bigger drop in Truss after Kwarteng’s disastrous budget announcement last month last one would avoid a new panic.
The promised tax reforms were the centerpiece of Truss’ successful speech to Conservative Party members that she, rather than her rival Rishi Sunak, was the best candidate to replace Johnson.
The yield on UK 10-year government bonds wavered in afternoon trading.
A new YouGov poll for The Times newspaper said 43% of Tory voters want a new prime minister in Downing Street.
Labor leader Keir Starmer said dropping Kwarteng would “not undo the damage done to Downing Street”.
Tony Travers, from the London School of Economics, told AFP that Kwarteng had become “the scapegoat for government mistakes” but that the sacking had not relieved Truss or calmed the Tories.
– ‘Bad plaster’ –
Speaking in Washington on Thursday, Kwarteng insisted his job was safe. “I’m not going anywhere,” he said.
Several reports said senior Tory MPs were plotting to unseat Truss by installing a new leadership team under Sunak and Penny Mordaunt, who also ran to succeed Johnson.
“They said it was untenable for the Prime Minister to stay on after sacking @KwasiKwarteng who was implementing the program that had won him the Tory leadership,” he wrote.
‘The writing was on the wall as markets surged in anticipated joy that another post-budget reversal was imminent and that corporate tax measures were a big part of boosting sentiment today’ today,” said AJ Bell financial analyst Danni Hewson.