Kwasi Kwarteng has announced that Liz Truss has sacked him as chancellor, as the prime minister tries to restore her political authority before a U-turn on parts of her disastrous mini-budget later on Friday.
In a tweeted letter to Truss, Kwarteng began: “You have asked me to stand aside as chancellor. I have accepted.”
Earlier, Downing Street sources had told the Guardian the prime minister wanted Kwarteng to “carry the can” over her climbdown as she sought to calm the markets and the nerves of jittery Tory MPs.
Truss met Kwarteng, previously her closest political ally and co-architect of her plan for growth, for crisis talks in Downing Street after he dashed back overnight from an International Monetary Fund (IMF) meeting in Washington DC.
Truss was due to hold a press conference at Downing Street later on Friday.
In the letter, Kwarteng argues that their plan to rapidly cut taxes was the correct one despite the turbulent market reaction to his 23 September mini-budget, saying: “Following the status quo was simply not an option.”
He went on: “The economic situation has changed rapidly since we set out the growth plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury, we have responded to those events, and I commend my officials for their dedication.”
Noting that he and Truss had been “colleagues and friends for many years”, Kwarteng backed Truss’s economic vision and said it had been “an honour” to serve her.
He added: “It is important now as we move forward to emphasize your government’s commitment to fiscal discipline. The medium-term fiscal plan is crucial to that end, and I look forward to supporting you and my successor to achieve that from the backbenches.”
Whitehall insiders said the pair had held different views on how far the government should go in reversing key elements of its plan to steady the markets and placate anxious Conservative MPs.
They said Kwarteng had been pushing for a full retreat on the corporation tax policy, raising it from the current 19% rate to the planned 25%, while the prime minister had wanted to go for just a fraction of the rise.
One Treasury insider said Kwarteng had all along been “more prepared to U-turn” than Truss on corporation tax and previously the 45p rate, despite him largely getting the blame for the policies.
However, Downing Street insiders said Truss was expected to fully retreat on the plan.