British Chancellor Jeremy Hunt, who was parachuted into office on Friday, will attempt to calm the markets on Monday with details of how he intends to dismantle elements of the mini-budget introduced by his predecessor Kwasi Kwarteng.
Mr Hunt will set out billions of pounds of savings to stabilise the public finances in an emergency statement, seeking to stem a dramatic loss of confidence among investors in the government.
Prime Minister Liz Truss was heavily involved in Mr Kwarteng's mini-budget last month. As her economic strategy is ditched, she has faced calls to be replaced.
Her fate could be sealed by the mood of markets and her own backbench MPs, as she battles to save her post.
The financial markets have endured weeks of turmoil following a £45 billion ($50.3bn) mini-budget tax giveaway by Mr Kwarteng.
There were concerns the markets would blow another hole in the UK's economic plans when they opened today, the first day since the Bank of England withdrew its bond-buying support.
The battered pound and UK government bonds rallied on Monday ahead of Mr Hunt’s emergency statement after the Treasury issued a 6am statement saying Mr Hunt would announce further details of his plans this morning, followed by a statement in the House of Commons later in the day.
Yields on 30-year and 10-year government bonds – also known as gilts – tumbled by around 8 per cent in early trading as the Chancellor’s announcement that he will bring forward a fiscal statement soothed volatile markets.
Sterling leapt more than 1 per cent to 1.131 US dollars at one stage after the news, which was unveiled before markets opened and ahead of what many feared would be a testing day for the pound and gilts.
The Treasury said Mr Hunt's move — two weeks earlier than scheduled and coming after talks at the weekend between Mr Hunt and Ms Truss — was designed to “ensure sustainable public finances underpin economic growth”.
Mr Hunt met Bank of England governor Andrew Bailey and the head of Britain's Debt Management Office government agency late on Sunday to brief them on his plans, the Treasury said.
The publication of the full medium-term fiscal plan is still scheduled to be published on October 31.
After his surprise appointment on Friday, Mr Hunt effectively tore up Ms Truss and Mr Kwarteng’s previous economic strategy to cut taxes in an attempt to boost growth.
Mr Kwarteng survived just 38 days as chancellor — the second shortest tenure ever.
Instead, Mr Hunt said taxes would have to go up while spending would rise less quickly than had previously been planned.
Among the measures announced by Mr Kwarteng expected to be ditched are his promise to bring forward a 1p cut in the basic rate of income tax to April.
“Strong start by Jeremy Hunt as chancellor,” Mel Stride, the Conservative MP who chairs parliament's Treasury committee, said on Twitter.
“Gets what needs to be done and is acting fast. Surprising markets positively on the upside with an early statement to House of Commons today is a wise move. Message is: ‘We get what needs to be done and it’s being sorted.'”
A back bench Conservative MP has said Ms Truss’s political weakness means that Mr Hunt is now “de facto prime minister”.
Sir Roger Gale told Sky News: “I think Jeremy Hunt has taken on the job … on his own terms.
“He’s said he will do it, but he will only do it if he can do what he believes to be necessary to stabilise the markets, to stabilise the economy and to get the show back on track … There is real power in Downing Street, but it’s not in No 10, it’s in No 11.
“I think Jeremy Hunt is de facto prime minister at the moment.
Labour's shadow chief secretary to the Treasury said the move was “evidence of the panic in government”.
Pat McFadden told BBC Breakfast: “The reason [Mr Hunt] is doing this is because ministers are terrified of what happens when markets open this morning.
“It is testament how much chaos has been caused by Liz Truss since she became prime minister.”
The measures come as Ms Truss continues to fight to hold on to her leadership, with three Conservative MPs already breaking ranks to call on her to go.
Crispin Blunt, Andrew Bridgen and Jamie Wallis all called on the prime minister to quit on Sunday, while other senior figures within the parliamentary party expressed deep unease with her leadership but stopped short of calling for her to go.
Mr Blunt was the first MP to demand her exit, telling Channel 4’s Andrew Neil Show on Sunday: “I think the game is up and it is now a question as to how the succession is managed.”
It came at the end of another extraordinary weekend in British politics, in which even US President Joe Biden intervened to call Ms Truss’s economic vision a “mistake”.
Mr Hunt, who carried out something of a media blitz on behalf of the prime minister at the weekend, insisted that she was still in charge even as he diagnosed the need for a tough package of tax rises and spending cuts in order to steady the UK economy.
Leader of the House of Commons Penny Mordaunt — a former candidate for the Tory Party leadership — also offered the prime minister her full support, using a piece in the Telegraph to warn that the UK “needs stability, not a soap opera”.
She told colleagues that the “national mission” was clear but said it “needs pragmatism and teamwork”.
“It needs us to work with the prime minister and her new chancellor. It needs all of us.”
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Jeremy Hunt leaves 10 Downing Street in London after he was appointed Chancellor of the Exchequer following the resignation of Kwasi Kwarteng. Here 'The National' looks back through Mr Hunt's political career. PA -
Mr Hunt holds a video conference call with Bank of England Governor Andrew Bailey from his offices in the Treasury. Photo: HM Treasury -
Mr Hunt conducts a series of television and radio interviews after his appointment as chancellor. Photo: HM Treasury -
Mr Hunt speaks during an interview outside BBC Broadcasting House in July. At the time he was a contender to replace Prime Minster Boris Johnson as Conservative Party leader. Getty -
Mr Hunt after losing to leadership contender Boris Johnson, who became British Prime Minister in July 2019. Getty -
Showcasing his credentials in July 2019. Now, Mr Hunt is charged with leading Britain out of an economic malaise. Getty Images -
With party member and president of the Bramshot and Liphook Conservative branch Tony Rudgard, 96, in 2019. Getty -
Mr Hunt speaks at the South-West Hustings in Exeter, in June 2019. Getty -
Meeting then-US secretary of state Mike Pompeo in May 2019 in London. Getty -
Mr Hunt and his Czech counterpart Tomas Petricek hold up football shirts on arrival at the Foreign Office in London in March 2019. Getty -
Mr Hunt as health secretary, outside his home in London in 2016. Getty -
He delivers a speech at the Conservative Party Conference in Birmingham in 2016. Getty -
Mr Hunt joins local Conservative Party activists as they campaign on the constituency's battle bus in Thurrock in 2015. Getty -
Mr Hunt looks on as then-prime minister David Cameron hosts a Cabinet meeting at No 10 Downing Street in 2015. Getty
Meanwhile, former transport secretary Grant Shapps — who has reportedly been floated as a potential successor to the prime minister — wrote in The Times that the party needed to “bin the infighting and ideology”, but did not explicitly back Ms Truss.
“We, as a party, have two years to get ourselves out of this hole, and it is a deep hole when it comes to public confidence,” he said.
“But we have a couple of things on our side. Despite the factionalism in the run-up to and aftermath of Brexit, our MPs are overwhelmingly predisposed to supporting a competent leader.”
Mr Hunt told the BBC’s Sunday With Laura Kuenssberg programme that Ms Truss remained “in charge” and insisted voters can still put their faith in her.
“She has listened. She has changed. She has been willing to do that most difficult thing in politics, which is to change tack,” he said.
“What we are going to do is to show not just what we want but how we are going to get there.”
The presence of Mr Hunt was welcomed by many MPs, but many senior figures admitted it was an open question whether the prime minister could still survive the current crisis.
Tory MP Robert Halfon, chairman of the Commons education committee, appeared on Sky News and declined to deny that MPs were considering installing a new leader.
“We are all talking to see what can be done about it.”
Over the past few weeks, the government has “treated the whole country as kind of laboratory mice”, he said.
Senior Conservative Alicia Kearns also told Times Radio that the question of whether Ms Truss should continue in charge was “incredibly difficult”.
And writing in the Telegraph, former minister Liam Fox called the current situation the “deepest political hole that we have experienced in a generation”.
Stuart Rose, a Tory peer and the chairman of the Asda supermarket chain, told the Financial Times the prime minister was a “busted flush”.
Labour added to that pressure, with Sir Keir Starmer calling on the prime minister to appear before the Commons on Monday.
The Labour leader quipped that Ms Truss is now “in office but not in power”.
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Britain's Prime Minister Liz Truss during Prime Minister's Questions in the House of Commons in London, addressing Parliament for the first time since abandoning her disastrous tax-slashing economic policies. Here, 'The National' looks at her time in power so far. AFP -
Liz Truss speaks to Grant Shapps at Downing Street as he is appointed Home Secretary, after the resignation of Suella Braverman. Photo: Simon Dawson / No 10 Downing Street -
A mural by artist Ciaran Gallagher in Belfast is updated to reflect Liz Truss's current political troubles. PA -
Britain's new Chancellor of the Exchequer Jeremy Hunt announcing tax and spending measures at the House of Commons in London, with Liz Truss sitting on the bench behind him. AFP -
Liz Truss gives a speech after sacking Kwasi Kwarteng as chancellor of the exchequer. Reuters -
A protest by climate change group Extinction Rebellion in central London. Ms Truss has said the group is part of an 'anti-growth coalition' with trade unions and the main opposition Labour Party. AFP -
Ms Truss has come under increasing pressure during her short time as prime minister. AFP -
An Extinction Rebellion protest outside Downing Street on the day Mr Kwarteng was removed from the government. AP -
Ms Truss with members of the England women's football team and the European Championship trophy in Teddington, south-west London. Getty -
Ms Truss arrives for a meeting of the European Political Community at Prague Castle in the Czech Republic. AP -
Ms Truss and her husband Hugh O'Leary wave after her keynote speech at the Conservative Party conference in Birmingham. AP -
Liz Truss gives a speech at the Conservative Party Conference. EPA -
Ms Truss meets with Mr Kwarteng, chancellor of the exchequer at the time. Photo: Andrew Parsons / CCHQ -
Ms Truss and Mr Kwarteng visit a construction site for a medical innovation campus in Birmingham. AFP -
Ms Truss meets US President Joe Biden for talks at the UN headquarters in New York. PA -
Ms Truss delivers a speech at the 77th session of the General Assembly at the UN headquarters in New York. AP -
The British prime minister holds a bilateral meeting with Turkish President Recep Tayyip Erdogan in New York. Reuters -
Ms Truss meets French President Emmanuel Macron at the UN headquarters in New York. Reuters -
Ms Truss speaks to the media during her visit to the Empire State building in New York. AP -
Britain's new leader speaks during the state funeral of Queen Elizabeth at Westminster Abbey, London. PA -
Ms Truss and her husband Hugh O'Leary observe a minute's silence at Number 10 Downing Street following the death of the queen. Reuters -
Britain's Labour Party leader Sir Keir Starmer and Ms Truss leave after a service for the reception of Queen Elizabeth's coffin at Westminster Hall in the Palace of Westminster. AFP -
Ms Truss joins the Speaker Lindsay Hoyle and selected MPs to take the oath and swear allegiance to King Charles III in the House of Commons chamber. PA -
King Charles during his first audience with Ms Truss at Buckingham Palace, London, following the death of Queen Elizabeth. Getty Images -
Ms Truss gives a reading during a service of prayer and reflection, following the passing of Queen Elizabeth, at St Paul's Cathedral in London. Getty Images -
The British prime minister makes a statement outside 10 Downing Street in London following the queen's death. Bloomberg -
Ms Truss speaking during her first weekly Prime Minister's Questions session at the House of Commons in London. AFP -
Front pages of a selection of British national newspapers, each leading with a story about Ms Truss becoming Britain's new prime minister. AFP -
People walk past an image in central London of Ms Truss on the side of a protest bus calling for a citizens' assembly. Reuters -
Ms Truss holds her first Cabinet meeting at 10 Downing Street. Reuters -
Ms Truss speaks at Downing Street on the day she took over as prime minister from Boris Johnson. EPA -
Ms Truss poses with her husband Hugh O'Leary at Downing Street before entering as prime minister for the first time. EPA -
Ms Truss is welcomed by staff in Downing Street as she enters the famous prime ministerial offices for the first time. Andrew Parsons / No 10 Downing Street -
New Health Secretary Therese Coffey and Number 10 staff shelter from a downpour as they wait for Ms Truss to arrive in Downing Street. PA -
Liz Truss makes a speech outside 10 Downing Street, London, after meeting Queen Elizabeth II and accepting her invitation to become prime minister and form a new government. PA -
Queen Elizabeth II greets the newly elected leader of the Conservative Party, Ms Truss, at Balmoral Castle in Scotland. The queen invited Ms Truss to become prime minister and form a new government. Getty Images
It comes as a new poll, first published in the Guardian, predicted a landslide for Labour and wipeout for the Tories.
The poll, by Opinium for the Trades Union Congress, put Labour on 411 seats, compared with the Tories on 137.
In a sign of how divided the party is, former culture secretary Nadine Dorries hit out at her party colleagues.
“I cannot imagine there is one G7 country which thinks we are worthy of a place at the table.
“The removal of one electorally successful PM, the disgraceful plotting to remove another by those who didn’t get their way first time round is destabilising our economy and our reputation,” she tweeted.
