The United Kingdom government has concluded plans to raise corporation tax as against its promise not to do so in the mini-budget.
Kwasi Kwarteng, who was today sacked as chancellor, had last month during the presentation of mini-budget promised that corporate tax will remain at 19% dispelling rumour of planned increase to 25%.
The change in direction is the second major tax cut U-turn in three weeks after the government confirmed it would not go ahead with a plan to scrap the 45p top rate of income tax promised in the mini-budget on 23 September.
Mr Kwarteng cut short his trip to the International Monetary Fund in Washington DC and returned to the UK on Friday morning as expectations of another significant U-turn mounted.
But his early return was not enough to save his job and less than two hours after he landed, he had been sacked, Sky News understands.
After days of unrest in Westminster among Tory MPs, one former cabinet minister earlier told Sky News that Mr Kwarteng being sacked was “inevitable”.
But just hours earlier, international trade minister Greg Hands told Sky News the PM has “total confidence” in Mr Kwarteng.
Labour’s shadow chancellor, Rachel Reeves, said: “A humiliating U-turn is necessary – but the real damage has already been done to millions of ordinary people now paying much higher mortgages and struggling to make ends meet.”
The past three weeks have been marked by economic turmoil, with the pound reaching a record low against the dollar, interest rates soaring and the Bank of England having to intervene.
The reversal follows warnings from the Institute for Fiscal Studies, a leading economics think tank, that Mr Kwarteng’s £45bn package of unfunded tax cuts had left a £62bn black hole in the public finances.
The government has come under increasing pressure from senior Tories to take steps to reverse aspects of the mini-budget to allay market concerns.
Speaking at a tensed Press Conference, Prime Minister Liz Truss said she met the “former chancellor” Kwasi Kwarteng today and was “I was incredibly sorry to lose him.”
“He is a great friend and he shares my vision to set this country on the path to growth. Today, I have asked Jeremy Hunt to become the new chancellor. He’s one of the most experienced and widely respected government ministers and parliamentarians, and he shares my convictions and ambitions for our country.
“He will deliver the medium-term fiscal plan at the end of this month. He will see through the support we are providing to help families and businesses, including our energy price guarantee.
“That’s protecting people from higher energy bills this winter. And he will drive our mission to go for growth, including taking forward the supply-side reforms that our country needs. We owe it to the next generation to improve our economic performance, to deliver higher wages, new jobs and better public services, and to ease the burden of debt.
“I have acted decisively today because my priority is ensuring our country’s economic stability as prime minister.” (Culled from Sky News
