LONDON (AP) – Embattled British Prime Minister Liz Truss sacked her Treasury chief and reversed course on a major part of her tax-cutting economic plan on Friday as she struggled to hang on to her job after weeks of turmoil on financial markets. But the market response was muted and the political reaction to what many saw as panicked moves left Truss’ credibility in tatters after only six weeks in office.
At a hastily arranged news conference, Truss said she was acting to “reassure the markets of our fiscal discipline” by ditching her pledge to scrap a planned increase in corporation tax.
Earlier, she fired her close friend Kwasi Kwarteng as head of the Treasury and replaced him with Jeremy Hunt, a long-time lawmaker who has served three previous stints as a Cabinet minister.
Truss is trying to restore confidence and rebuild her credibility with international investors and members of her own party after the “mini-budget” she and Kwarteng unveiled three weeks ago sparked political and economic turmoil.
The government’s September 23 announcement that it planned to cut taxes by GBP45 billion (USD50 billion) without detailing how it would pay for them or offering independent analysis about the impact on public finances raised concerns that government borrowing could rise to unsustainable levels.
That sent the pound plunging to a record low against the dollar and forced the Bank of England to step in to prevent a wider economic crisis.
Truss has now cancelled about GBP20 billion of the originally planned tax cuts.
But her brief, downbeat news conference is unlikely to have reassured Truss’ Conservative Party that she is in control.
“I think she’s just confirmed that she’s not the right person for the job,” said professor of politics at Queen Mary University of London Tim Bale.
Despite backtracking on a major part of her programme, Truss clung to the idea that her policies were what the country needs to spur economic growth.
She also avoided questions about why she should remain in office when she and Kwarteng were equally responsible for the economic plan and the fallout it triggered.