Why Kwasi Kwarteng was sacked as UK’s Chancellor of the Exchequer

After being in office for 38 days, Kwasi Kwarteng, the British-born politician of Ghanaian parentage was sacked by Prime Minister Liz Truss as the Chancellor of the Exchequer. The dismissal was after Kwarteng presented a mini-budget which resulted in financial turbulence and revolt from Conservative Party lawmakers. While presenting the mini-budget on 23 September, an eye-watering £45 billion in tax cuts alongside an energy relief plan projected to cost £60 billion over the next six months was announced by Kwasi Kwarteng. This, according to various media reportage was a huge departure from the fiscal policy of the Johnson government, which had planned tax rises to pay for health and social care and to manage the post-Covid deficit. Kwarteng claimed his ambitious plans would drive growth and reduce inflation. The financial markets disagreed: in the days after his announcement, lenders pulled mortgage packages, the pound hit a record low against the dollar, and the Bank of England started buying bonds at ‘an urgent pace’ to calm the markets and stop pension funds going bust. In a high-risk strategy designed to revive Britain’s stagnant economy, the British of Ghanaian descent announced more than £400bn of extra borrowing over the coming years to fund the biggest giveaway since Tony Barber’s ill-fated 1972 budget. The Guardian reported that the Conservative MP said tax cuts worth more than £55,000 annually to someone earning £1m a year were part of a new direction for the economy and were designed to help boost growth to 2.5% a year. Some Labour MPs described them as a “class war”. The Treasury admitted there were no forecasts for the impact of the measures on growth and the gamble received a hostile reception not just from the markets and opposition politicians, but from economic think tanks and many Tory MPs, some of whom were aghast. PEN/SARA Watch the latest episode of BizTech below: