‘You Have Asked Me To Stand Aside’: Kwarteng Sacked By Truss

“I hope the PM doesn’t think the problem can be solved by getting rid of the Chancellor,” Philip Hammond told the BBC on Friday.

Hours after media reports confirmed that Liz Truss was indeed prepared to drop some aspects of the growth plan which roiled UK markets last month, leading to emergency action from the Bank of England to prevent an unprecedented selloff in gilts from collapsing the country’s pension funds, Kwasi Kwarteng was sacked as Chancellor.

“You have asked me to stand aside,” Kwarteng began, in a sad letter to Truss. “I have accepted.” He continued:

When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.

As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation — that must still change if this country is to succeed.

The economic environment has changed rapidly since we set out the growth plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I commend my officials for their dedication.

It is important now as we move forward to emphasize your government’s commitment to fiscal discipline. The medium-term fiscal plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches.

We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been an honor to serve as your first chancellor.

Your success is this country’s success and I wish you well.

That’s touching, but what matters currently is whether it’ll be enough to shore up market sentiment and restore faith in the government.

I’d say not. The problem, ultimately, is Truss. She’s an opportunist and a political shape-shifter. Her ill-conceived growth plan looked suspiciously like an attempt to self-validate her own Thatcher pretensions by way of ad hoc tax cuts, with what appeared to be no regard whatsoever for the optics of unfunded spending set against imminent BoE gilt-selling (i.e., QT) and a febrile global rates market. She paid the price.

My guess is that Truss won’t survive as prime minister for much longer. This situation can’t work, and therefore won’t work. If the market doesn’t force her out, her own Tories will compel her resignation. Again, that’s just my opinion, but I’d emphasize that I’m pretty confident in expressing it.

“Changing the chancellor doesn’t undo the damage that’s already been done,” Labour’s shadow chancellor, Rachel Reeves, said, adding that,

It was a crisis made in Downing Street. Liz Truss and the Conservatives crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage.

We don’t just need a change in chancellor, we need a change in government. Only Labour offers the leadership and ideas Britain needs to secure the economy and get out of this mess.

Jeremy Hunt will succeed Kwarteng. Wish him luck.