Prime Minister Liz Truss of the United Kingdom dismissed her finance minister Kwasi Kwarteng.
After receiving criticism for an economic strategy that was supposed to help the nation’s deteriorating economy, Truss made the decision.
The prime minister reportedly considers abandoning the proposal to save her image with national and foreign observers who voiced opposition to it.
Kwarteng expressed no ill will on the matter. In fact, the former finance minister endorsed Truss’s choice in a tweet.
Kwarteng stated that he concurs with the prime minister’s vision and strategy for the future. Jeremy Hunt replaces Kwarteng as finance minister.
Hunt serves as the UK’s fourth finance minister in more than three months. The government said it will conduct a press conference in reaction to the most recent administrative ruling.
Three weeks ago, Kwarteng unveiled a spending strategy to the public. It included significant tax cuts and government borrowing to boost the economy.
The concept, however, received criticisms, and analysts claimed that it would simply aggravate inflation and drive up the cost of goods.
Instability in the UK
The bank of England also stated that the proposal would cause the UK’s financial situation even more unstable.
Additionally, the banking institution reduced inflationary pressures on residents, particularly pension recipients. The International Monetary Fund, investors, agencies, and even members of Truss’ party criticize the tax reduction among other stakeholders.
Further, there have been discussions about having her removed from her job, which caused Truss to take steps to maintain her political career.
Kwarteng attended the IMF Meeting in Washington before being let off from his post. After the meeting, he took a flight back to the UK, where he met with Truss to go through crucial issues, including his abrupt termination from the job.
With only 38 days, Kwarteng’s time as finance minister served as the second-shortest in UK politics.
The markets well received the UK government’s shift in perspective. Markets became receptive to policy adjustments that can improve the position of the UK economy. Experts see better market conditions.
While government debt decreased from $5% to 3%, the pound’s value jumped to $1.12 from a record low of $1.03 last month.
It was a necessary decision says Truss
Charlie Bean, a former governor of the Bank of England, asserts that given that Kwarteng’s financial strategy would not be successful, Truss removed him forcefully.
But after firing Kwarteng, Truss will need to develop a new economic strategy immediately. The strategy should address the UK economy’s major problems, including government debt.
“What the markets want to see is a coherent picture, how it all fits together. In the absence of that, you’re going to see sterling and gilts coming under pressure again,” Bean said.
Photo Credit: BBC