Kwasi Kwarteng was widely celebrated as the first Black Chancellor in the British government. But the celebration has been cut short by the turmoil unleashed on the UK’s economy by the policies he and Liz Truss, the Prime Minister, introduced.
Truss had campaigned that she would effect tax cuts, a policy wholeheartedly supported by Kwarteng who in September 23, announced £45bn in unfunded tax cuts under the mini-budget.
The mini-budget unleashed unprecedented economic chaos that sent the pound tumbling against the dollar, stirring severe criticism from members of the parliament, including conservatives.
The unpopular tax policy, which hiked the cost of government borrowing and mortgage rates, led the Bank of England to intervene and forced Truss to U-turn some of her economic policies.
The first humiliating backtrack of Truss’ tax policy took effect early this month, with Kwarteng admitting that the tax plan is “drowning out a strong package.” The U-turn seems not enough to ameliorate the negative impact the policy has made on the UK’s economy, which has weakened investors’ confidence, now Kwarteng has to pay for it with his job.
“You have asked me to stand aside as your chancellor. I have accepted,” Kwarteng said in his resignation letter to Truss.
He explained that he accepted the job “in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices”.
Kwarteng, who was appointed as chancellor on September 6, was barely one month on the job, making him the fourth chancellor the Conservative Party has had in the past three years. Nadhim Zahawi, Rishi Sunak and Sajid Javid had all come before Kwarteng.
The former chancellor said he has trust in the Prime Minister’s “vision of optimism” and believes “growth and change was right” and “following the status quo was simply not an option”.
“It has been an honour to serve as your first chancellor. Your success is this country’s success and I wish you well,” he wrote.
— Kwasi Kwarteng (@KwasiKwarteng) October 14, 2022
Truss has replaced Kwarteng with Jeremy Hunt. She said Kwarteng had “put the national interest first” by agreeing to her demand that he step aside less than six weeks into the job.
The UK economy has struggled to stay afloat amidst global economic strains buoyed by the Russia-Ukraine conflict. Truss and Kwarteng, who have been close friends for years, have pointed at the conflict and the pandemic as reasons for the UK economic troubles.
Their reasons however, were not bought by the opposition parties, with Tory MPs openly revolting last week and Labour recording surge in the polls.
After her humiliating backtrack on scrapping the 45p top rate income tax, Truss now faces a second reckoning. Instead of cutting taxes, the government is expected on Friday to raise corporation tax from 19% to 25% next April, marking Truss’ second U-turn.
However, the sacking of Kwarteng has proved the concern expressed by some analysts true. Analysts had said upon the appointment of Kwarteng as the finance minister, that he would be easily sacrificed if anything goes wrong in Truss’ government.
“The idea that the prime minister can just scapegoat her chancellor and move on is deluded,” A Tory MP told Sky News. “This is her vision. She signed off on every detail and she defended it.”
But it is not clear how long Truss will last as the Prime Minister due to the growing revolt she is now facing. Already the call is being made for her resignation. Scotland’s First Minister, Nicola Sturgeon, has called on the Prime Minister to stand down, adding that if she refuses, her MPs should back an election.
“The best thing Liz Truss could do for economic stability now is resign,” she said. “Her decisions have crashed the economy and heaped misery on people already struggling with a cost-of-living crisis.
“The only decent thing for Tory MPs to do now is call time on her government and allow an election.”
also, Scottish Labour leader Anas Sarwar said “11th hour U-turns and scapegoating” will not be enough to save Ms Truss.
“It’s not just Kwasi Kwarteng that needs to go. We need to remove all those that were involved in putting together this disastrous plan, and everyone that signed it off – not just the guy who read it out.
“It’s time to remove this economically illiterate and morally bankrupt Tory party from government. We need a general election now, so that Labour can boot this rotten Tory Government out of office,” he said.
