Kwasi Kwarteng has cut his trip to the US short to fly home for 'crunch talks' with Liz Truss amid the expectation of another major mini-budget U-turn.
The Chancellor was due to attend a final day of meetings at the international Monetary Fund’s (IMF) annual meeting in Washington today. But he told journalists on Thursday evening that he would fly back overnight, according to reports.
It comes as the Prime Minister is expected to be forced to scrap parts of her Chancellor's mini-budget in the days to come, amid growing pressure to reassure markets and rescue her administration. Reports suggest a U-turn will be made on the government's plan to scrap a rise in corporation tax, one of the landmark promises made by Ms Truss in her pitch to become Tory leader.
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Downing Street on Thursday did not deny that the potential exists for a reversal on the policy. Speculation was fuelled further when the Chancellor, in an interview with the Telegraph, only said 'let’s see' when asked about the expectation from financial markets that the government could ditch its corporation tax promise.
Friday is set to be a crunch day in the financial markets, with the Bank of England’s emergency bond-buying scheme due to come to an end. Officials stepped in two weeks ago after the mini-budget sent markets into chaos amid concerns over higher borrowing costs, triggering concerns in particular about the fate of pension funds.
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A growing expectation on Thursday of a government U-turn on corporation tax appeared to reassure the finance industry, after Bank of England Governor Andrew Bailey spooked the markets by insisting that the emergency support would not be extended. Mr Kwarteng also insisted to the Telegraph that there would be 'no real cuts to public spending', appearing to double down on comments made in the Commons by the Prime Minister on Wednesday.
This comes amid reports that senior Tories are plotting the possibility of replacing Ms Truss with a joint ticket of Rishi Sunak and Penny Mordaunt, with the Times newspaper also reporting that party grandees are considering replacing her with a 'unity candidate'.
The PA news agency has contacted the Treasury for comment.
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