Business Maverick: Truss Dumps UK Corporation Tax Freeze Plan After Firing Ally

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Liz Truss scrapped her plan to freeze corporation tax next year in another dramatic U-turn, hours after she fired her ally Kwasi Kwarteng and replaced him with Jeremy Hunt as UK Chancellor of the Exchequer.

“It is clear that part of our mini budget went further and faster than the markets were expecting,” Truss said Friday in a short press conference. “So the way we are delivering our mission right now has to change.”

Her position hangs in the balance after less than three weeks in office, with members of her own Conservative Party openly plotting against her. Far from strengthening her hand, Truss’s nervous performance in the press conference has made it less likely that she survives as prime minister, according to three Conservative MPs who spoke on condition of anonymity.

Truss’s reversal is also a victory of sorts for Bank of England Governor Andrew Bailey, after the central bank was forced into the contradictory position of buying bonds to shore up the gilt market while raising rates to try to rein in inflation.This week, Bailey reiterated that the emergency program would end as planned on Friday, putting the BOE’s credibility on the line in the face of pressure to extend the purchases.

As well as appointing Hunt, Truss replaced Kwarteng’s deputy, Chris Philp, with Edward Argar. Philp moved to a ministerial post in the Cabinet Office.

 

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