UK’s Kwarteng abandons US trip as pressure over economy mounts

The sense of chaos at the heart of the government fuels speculation as to whether it can survive after 37 days in office.

UK Minister Kwasi Kwarteng
Allies say the chancellor is determined to deliver on his growth plan [File: Hannah McKay/Reuters]

Embattled British Prime Minister Liz Truss has scheduled a hastily arranged news conference after Chancellor Kwasi Kwarteng cut short his trip to Washington to return early to London, where pressure is mounting on the new government to scrap an economic policy that unleashed turmoil on financial markets.

Truss’ office did not disclose the subject of the news conference on Friday. Several British news outlets reported that Kwarteng was set to leave his post, while Downing Street refused to comment on “speculation”.

It comes a day after the battered pound and government bonds rallied as the government began re-examining the widely condemned package for unfunded tax cuts that has sent borrowing costs surging and forced the Bank of England to intervene.

The government is now being urged to reverse course as polls show public support for them has collapsed and as Conservative Party colleagues have started openly discussing whether they should be replaced, just 37 days after they entered office.

With financial markets shaking, the government has already brought forward an announcement for a full fiscal plan that will set out the cost of the unfunded tax cuts and whether they will spark economic growth.

Al Jazeera’s Neave Barker, reporting from London, said the government, which has repeatedly stressed the benefits of its plan, appears to be bending to pressure.

“A lot of speculation is growing over whether the government is now poised to announce a U-turn on some or many aspects of the budget,” he said.

“There is also a huge amount of speculation over what might potentially go, including possibly the decision to cut the cooperation tax,” he added.

‘Wait and see’

Greg Hands, a junior trade minister, suggested people would now need to “wait and see” what Kwarteng’s announcement, scheduled for October 31, brings.

Asked if the government was preparing to change course, Hands told Sky News: “I saw the prime minister yesterday. The prime minister and the chancellor are absolutely determined to deliver on the growth plan.

“I think we’re just going to have to wait and see what the chancellor says in the medium-term fiscal plan on the 31st of October.”

Mel Stride, a backer of Truss’s leadership rival Rishi Sunak and head of the influential parliamentary Treasury Select Committee, said that suggestion was unacceptable.

“I think we have reached a point now where we need this very powerful, significant signalling to the market that fiscal credibility is now firmly back on the table. And I think that means doing something right now,” Stride told BBC radio.

The sense of chaos at the heart of the government has fuelled speculation as to whether Truss and Kwarteng can survive.

Truss was elected by the members of the party, and not the broader electorate, as the fourth prime minister in six politically turbulent years in the UK.

Source: Al Jazeera and news agencies