Chancellor Kwasi Kwarteng has cut short his trip to the United States to attend urgent negotiations in Downing Street, where he has reversed his position on the mini-budget.
Mr. Kwarteng is flying home from Washington, D.C. early following days of open dissent by Conservative MPs over his economic proposal.
Prime Minister Liz Truss is under pressure to alter her strategy to ease market volatility and reassure her party.
After reports suggested that portions of the plan could be scrapped, No. 10 downplayed rumors of forthcoming modifications.
A source from Downing Street told that the prime minister thinks the chancellor is “doing an outstanding job and that they are in lockstep.”
After a previous U-turn on Ms. Truss’s intention to eliminate the top rate of income tax, a large number of Tory legislators believe that a further shift in policy is imminent.
Some Conservative lawmakers are also discussing the possibility of the chancellor quitting or the prime minister is removed from office, with some mentioning a replacement team consisting of Rishi Sunak and Penny Mordaunt.
Under this scenario, Tory MPs would recommend only one person to succeed the prime minister, with the other individual assuming a key cabinet position, so avoiding the necessity for a second leadership election.
In a tweet that exposed Tory differences, former cabinet minister Nadine Dorries accused those calling for the removal of Ms. Truss of a “conspiracy to overthrow democracy.”
Mr. Kwarteng had been in Washington, D.C. for a meeting of global finance ministers at the annual meeting of the International Monetary Fund (IMF).
A source close to the chancellor stated, about the change in his travel plans, that he “truly wants to communicate with both government colleagues and MPs” regarding the financial plans.
Last month’s mini-budget, which included £45 billion in tax cuts financed by borrowing, frightened financial markets and led to a decline in the value of the pound.
He had to abandon proposals to reduce the highest rate of income tax, which constituted only £2 billion of the package.
However, persistent market turbulence prompted the Bank of England to intervene by purchasing government bonds to stabilize their value.
The Bank has announced that it will remove its emergency support program on Friday as anticipated. However, the value of the pound has increased following rumors in Westminster that another U-turn was imminent.
There have been rumors that the government may abandon its intention to increase corporation tax, a tax on the profits of limited corporations in the United Kingdom.
In 2023, the tax was scheduled to grow from 19% to 25%, which was a central tenet of Ms. Truss’s campaign for the Tory leadership.
If the administration does reveal revisions to its plans, the timing of such an announcement is unclear.
Mr. Kwarteng is scheduled to release a financial statement on October 31, but he may be compelled to act much sooner if the markets and Tory lawmakers turn against him.
Ms. Truss’s allies are pushing her to adhere to the route she set when she became prime minister 39 days ago.
Sir Christopher Chope stated, “It would be completely contradictory with the prime minister’s objective of fostering growth, development, and more growth if we were to increase corporate tax after saying we wouldn’t.”
A U-turn, he continued, would be a “total betrayal” of her beliefs.
When asked if there would be adjustments to the mini-budget on Friday, trade minister Greg Hands told, “I don’t think so.”
Mr. Hands stated that it was now time for the Conservative Party to unite behind the newly-elected prime minister, who won the Conservative leadership election in the summer.
However, other Conservative lawmakers say that such U-turns are likely and should be implemented promptly to ease market worries.
Former minister Johnny Mercer demanded a “course correction” from 10 Downing Street, calling the impact of increased mortgage rates on homebuyers “politically untenable.”
Treasury Select Committee chairman Mel Stride urged the chancellor to make a “major” announcement “sooner rather than later.”
However, he stated that he did not support a leadership change, stating that “the last thing we need is further market volatility.”
One Tory lawmaker exclaimed, “It’s checkmate, we’re doomed.”
“There is no doubt in my opinion that they will have to discard tonnes of this material and make a U-turn,” stated a second speaker.
