UK PM Liz Truss announces another huge U-turn and names Jeremy Hunt as finance minister

LONDON, ENGLAND – OCTOBER 14: Britain’s Prime Minister Liz Truss attends a press conference in the Downing Street Briefing Room on October 14, 2022 in London, England. After just five weeks in the job, Prime Minister Liz Truss has sacked Chancellor of The Exchequer Kwasi Kwarteng after he delivered a mini-budget that plunged the UK economy into crisis. (Photo by Daniel Leal-WPA Pool/Getty Images)
Danioel Lee | Getty Images News | Getty Images

LONDON — British Prime Minister Liz Truss on Friday scrapped another key tax-cutting policy after firing her finance minister, in a bid to placate markets after the government’s controversial “mini-budget.”

“It is clear that parts of our mini-budget went further and faster than markets were expecting,” Truss said in a brief press conference.

Truss scrapped the pledge to reverse predecessor Boris Johnson’s hike of corporation tax from 19% to 25%, a decision estimated to restore around £18 billion ($20.1 billion) to the U.K. Treasury’s coffers by 2026.

Finance Minister Kwasi Kwarteng was fired earlier on Friday after less than six weeks in the job, amid mounting political pressure and market chaos.

Jeremy Hunt — a former health secretary and foreign secretary — was announced as Kwarteng’s successor. Chris Philp, chief secretary to the U.K. Treasury, was also replaced by Edward Argar.

Market reaction

U.K. government bonds — known as gilts — rallied sharply ahead of Truss’ news conference. The long-dated 30-year yield

briefly touched 4.261% during morning trade. Yields move inversely to prices.

However, bond prices gave back gains after the conference, with the 30-year yield returning to around 4.58% by around 3 p.m. U.K. time.

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