The British Finance Minister Quazi Kwarteng was fired today, at the behest of the new Prime Minister of Great Britain Liz Terrace To save her rule, to establish her position in the leadership of the conservative party and to calm the markets.
In his resignation letter, Kvarteng said “Since we presented the plan on September 23, the economy has changed significantly. And together with the Bank of England, we are dealing with the upheaval.”
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At the end of September, Kvarteng presented a “mini-budget” formulated together with Terras, which included, among other things, generous tax breaks for households and businesses, a comprehensive energy subsidy for residents and small businesses, the cancellation of an increase in social insurance and other measures that were not anchored in existing budgetary sources and involved increasing the deficit and the British national debt . The presentation of the budget was followed by a “Firesale”, when the market raised the yield on long-term British bonds, which led to a chain process that threatened the liquidity of British pension funds, and the immediate intervention of Bank of England in order to restore financial stability. The pound fell to a historic low of only $1.1.
The bank’s intervention was able to support the value of the bonds to a limited extent, but today (Friday) it should end. The bank has so far allocated about 65 billion pounds hypothetically to the purchase of British government bonds to support it, but in practice bought less in the auctions.
Behind the scenes, it was reported that Kwartang intends to withdraw some of the proposals he presented in the budget, and he himself committed to present a budget that will also include the budgetary sources on October 31, but now the task will be assigned to his successor in office. Kvarteng left Washington last night ahead of schedule, where he went to a series of meetings and consultations with the International Monetary Fund and other economic factors. Downing 10 officials told the “Guardian” that the immediate reason for the impeachment is “disagreements” regarding the scope of the necessary U-turn on the budget issue.
Kwarteng will be the shortest-serving Chancellor of the Exchequer (38 days) in modern British history, with the exception of a previous minister who died during his tenure, about a month after eight.
Trass intends to announce at the same time as the layoffs today the cancellation of tax breaks worth 45 billion pounds, and will probably also go back on her promises not to raise taxes on businesses in the coming years. This was one of her prominent election commitments, in the race for the leadership of the Conservative Party in recent months. Her opponent Rishi Sunak Criticized in the party after proposing to reduce the deficit and national debt through future tax increases. He accused Truss of an “economic plan that is out of touch with reality.” Sonak, finance minister in the outgoing Boris Johnson administration, lost the race to Truss.