Liz Truss To Hold Emergency Press Conference With Mini-Budget U-Turn Expected
Liz Truss will hold an emergency press confernce later today (Alamy)
Downing Street has announced that Liz Truss will hold a last minute press conference on Friday afternoon, where they are expected to announce a U-turn on scrapping the cut to corporation tax in a second major climbdown over the controversial "mini-Budget".
Chancellor Kwasi Kwarteng was forced to dash back from Washington DC a day early to help calm political chaos in Westminster, with The Times reporting the government will scrap plans to overhaul corporation tax.
Asked on Thursday if he was planning to reintroduce the previously announced 25% corporation tax increase, he told reporters: "Let's see".
Prime Minister Liz Truss is expected to announce the u-turn at a Downing Street press conference on Friday afternoon.
A swathe of senior cabinet figures, including Foreign Secretary James Cleverly, refused to say yesterday whether further u-turns could be coming on the Chancellor's financial plans after the government were forced earlier this month to ditch plans to scrap the top rate of income tax.
Kwarteng arrived back in London early Friday morning after cutting short his meetings with International Monetary Fund officials in the US capital.
A further u-turn would raise further questions about Kwarteng's future in the top cabinet role after Conservative MPs raised questions about the future of Truss's government.
And The Times have reported that Kwarteng could be sacked on Friday as part of the Prime Minister's plans to rescue her leadership.
A Tory party source tells PoliticsHome that any next chancellor will want full autonomy on the economy because of how close Truss has been to last month's mini budget. "It was, after all, her complete pitch through the summer. Her credibility is shot."
UK markets have been in turmoil since Truss's growth strategy was announced, with major fluctuations in the value of the pound, and a significant drop in the value of UK government bonds, which forced the Bank of England to make several major interventions to shore up pension funds exposed to the bonds.
Truss and Kwarteng have faced major pressure from their own backbenches to make further changes to the plans, with Commons Treasury Committee chair Mel Stride saying a "fundamental reset" was needed to calm markets.
Speaking on Friday, he said: "What I would like to hear is that these rumours there will be a reset moment around the tax measures he announced in late September are correct, because I think things have reached a stage now with the markets and with confidence in those financial markets where we need a fundamental reset."
Stride added that "unwinding" the proposed corporation tax changes should be "right at the heart" of the government's plans, saying: "You could end up in that circumstance in worst of all worlds, in that you've u-turned and it doesn't actually settle markets in the way we need to."
Responding to the rumoured u-turn, shadow chancellor Rachel Reeves said the government had created economic "chaos".
"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," she said.
"This is a Tory crisis: made in Downing Street. They have plunged our economy into chaos and crisis with Truss' discredited trickle down approach. It won’t be forgiven or forgotten.
"Only a Labour government has the credibility, authority and plan to fix things."
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