London: British Prime Minister Liz Truss has sacked Kwasi Kwarteng as her Chancellor after just 38 days in office, as she attempts to drag her government out of deep political turmoil following the disastrous financial impact of her mini-Budget.

Truss, who is due to hold a press conference later on Friday (London Time), had summoned Kwarteng to return early from his visit to Washington where he was meeting with international colleagues at the International Monetary Fund.

Kwasi Kwarteng has been fired as Chancellor of the Exchequer.Credit:Bloomberg

He confirmed that he has been sacked by posting a letter he had sent to Truss on Twitter.

In it, he said: “You have asked me to stand aside as your Chancellor. I have accepted.”

“When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.

“As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation – that must still change if this country is to succeed.”

The value of the pound had collapsed to record lows against the US dollar and British bonds have plunged after Kwarteng unveiled his “mini” Budget involving £45 billion of debt-financed tax cuts.

The Bank of England unleashed a dramatic £65-billion ($109-billion) bond-buying scheme as it warned of “material risk” to UK stability and pension markets amid the chaos that has sent government borrowing costs soaring.

But Kwarteng, a close and long-time political ally of Truss, pledged to remain loyal to her government and urged her to take bold political action.

“We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been an honour to serve as your first chancellor.

“Your success is this country’s success and I wish you well.”

Truss has already dropped their pledge to scrap the 45 per cent tax rate for high-income earners, and is now expected to reverse her pledge to scrap a corporation tax hike from 19 per cent to 25 per cent which had been scheduled for April next year.

Whoever replaces Kwarteng will be Britain’s fourth chancellor in four months, with Kwarteng serving just eight more than those managed by the Conservative Iain Macleod, who died in office after just 30 days in 1970.

Government bonds — at the centre of the turbulence that followed Kwarteng’s fiscal statement last month — have already staged a recovery from the lows of the week as markets increasingly anticipate a U-turn on the tax cuts. Gilts extended a rally from Thursday into Friday, with the yield on the 30-year bond down 0.24 percentage points to 4.31 per cent as its price rose sharply.

The pound slipped 0.4 per cent to $1.124 against the US dollar, trimming a rally overnight that had sent it as high as $1.137.

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