umpteenth scene shot a London. Prime Minister Liz Trussing ha torpedoed the Chancellor of the Exchequer – the equivalent of our Finance Minister – Kwasi Kwarteng, kicking him out just 40 days after taking office in Downing Street. The reason? Saving itself after the mess combined with the mini-budget maneuver which, after causing the perfect storm on the markets, threatens to transform his own premiership in the shortest in British history. On the other hand, the same dismissal of Kwaiteng it's almost a record. As the BBC points out, only Ian Macleod, who died in 1970 30 days after being appointed chancellor of the exchequer, lasted less at the helm of the British finance ministry.
By sacrificing his staunchest ally on the altar of a "higher good", Truss wanted to send a message to the entire Conservative Party, which according to the British media is already plotting behind her back to distrust her: the mistakes made in the past few weeks will never be repeated. Downing Street will return to "milder advice" before it is too late for the British economy, but above all before Truss is ousted from his party, joining Kwarteng and his predecessor Boris Johnson in the ranks of the "illustrious unemployed ”.
The dismissal of Kwasi Kwarteng, the statements
It officially was Kwaiteng to resign. Actually though farewell letter came after Truss had forced him to return early from a trip to Washington to give him the boot.
"You asked me to step aside as Chancellor. I agreed – Kwarteng wrote – When you asked me to serve as Chancellor, I did so knowing that the situation we faced was incredibly difficult, with global interest rates and energy prices rising. However, your vision of optimism, growth and change was right. As I have said several times over the past few weeks, following the status quo was not an option. For too long this country has been dogged by low growth rates and high taxation: all of that has yet to change if we want the country to succeed”.
Jeremy Hunt is the new Chancellor of the Exchequer
Will Jeremy Hunt, former foreign minister in the May government to take Kwarteng's place as chancellor of the exchequer.
Not a random choice at all. Hunt is a veteran dethe Conservative Party and is considered in all respects a moderate, far from the ultra-liberal Thatcherian line carried out to date by Truss and Kwarteng. With his nomination, therefore, Truss aims to bring back to his side some of the fringes of the party that have turned their backs on her in recent weeks.
Truss also steps back on taxes: the pound takes off
After the dismissal of Kwaiteng, during the press conference convened for this afternoon, Truss announced other important changes to the mini-budget package presented on 23 September. After cancellation of the tax rate cut which weighs on the richest segments of the population, the Premier did reverse gear also on the corporate tax: in his plans, the corporate tax would have been frozen at 19%, but from next April it will rise to 25% as previously foreseen.
“It is clear that parts of our budget have gone beyond and faster than market expectations so we have to for this act now to reassure markets about our commitment to fiscal discipline. I have therefore decided to maintain the corporate tax increase envisaged by the previous government,” Truss said at the press conference.
La storm that has unleashed on the markets, on the other hand, it has not subsided even with i maxi emergency interventions implemented by the bank d'England. The damage done to the image is too great and the distrust in the UK economy too deep for it to be possible to go ahead with a package of measures financed entirely in deficit. In fact, we recall that, after the announcement of the so-called "mini-budget", the pound has collapsed to historic lows, interest rates on gilts – UK government bonds – soared and pension funds teetered on the brink of default.
In the early afternoon, when the first rumors about the Premier backtracking began to circulate, the GBP it soared to 1,127 dollars (+1,6%), while the euro also fell to 0,863 (-1,2%) against the British currency. Also up sharply London Stock Exchange, which currently earns 1,6%.
An unprecedented defeat for Truss
Difficult to remember a debut equally disastrous. In just under 5 weeks, the credibility of the government led by Liz Truss has completely gone up in smoke. There is no longer anyone who trusts her: she doesn't have it his party, that according to the British press, he intends to oust her in record time. They don't have it citizens, with the Labor party leading the Conservatives by 33 points in the polls, a stellar distance never seen before. They don't have it the markets, which continue to hit British finance hard, despite Boe's desperate attempts to salvage what can be saved.
But there was someone who had foreseen everything. Who? Rishi sunak, former Chancellor of the Exchequer and responsible for the fall of the Johnson Government which had challenged Truss in the race for the premiership. In a late August face-off, Sunak described how "unenforceable fairy tales" the economic promises of Truss. Less than two months later, facts proved him right.
However, there is another aspect to underline: placing all the blame for what is happening on Truss would be unfair. I conservative they elected it precisely because of its economic promises that the Premier subsequently included in its fiscal manoeuvre. Those who are now turning their backs on her are the ones who first supported her hyperliberal ideology.
What will happen now?
According to British media a Trussing some will be granted other week. If the Prime Minister fails to repair the damage done quickly, her fate will be sealed. The rumors of Times (a newspaper very close to the conservatives) speak of a ready-made plan: the party would already be talking about a quick replacement with Rishi sunak new Prime Minister and Penny Mordaunt, current Leader of the House of Commons, Deputy Premier.
