LONDON — Britain’s Finance Minister Kwasi Kwarteng cut short his trip to Washington to return early Friday to London, where pressure is mounting for the new government to abandon an economic policy that has wreaked havoc on financial markets.
The battered pound and government bonds rallied on Thursday as Prime Minister Liz Truss’ government began reviewing a package of unfunded tax cuts that have pushed up borrowing costs and forced the Bank of England to intervene.
Sources familiar with the matter told Reuters that Kwarteng left a meeting of global finance ministers in Washington to join colleagues seeking to balance the books of a budget plan announced just three weeks ago.
Truss and Kwarteng are now under enormous pressure to turn the tide as polls show their support has plummeted and colleagues have started openly discussing their replacement, just 37 days after taking office.
As pressure mounts in financial markets, the government has already announced a comprehensive budget plan that will set out the cost of unfunded tax cuts and whether they will boost economic growth.
Greg Hands, a deputy trade minister, suggested people should now “wait and see” what Kwarteng announces at the event, scheduled for October 31.
Asked if the government is preparing to change course, he told Sky News: ‘I saw the prime minister yesterday. The prime minister and the chancellor are absolutely committed to delivering the growth plan .
“I think we’re going to have to wait and see what the chancellor says in the medium-term budget plan on October 31.”
Mel Stride, a supporter of Truss leadership rival Rishi Sunak and the head of the influential House Treasury Committee, said the suggestion was unacceptable.
“I think we’ve reached a point now where we need this very powerful and meaningful signal to the market that fiscal credibility is now firmly back on the table. And I think that means doing something now,” said Stride on BBC radio.
The sense of chaos at the heart of government has fueled speculation about whether Truss and Kwarteng can survive. Truss was elected by party members, not the wider electorate, as Britain’s fourth prime minister in six politically turbulent years.
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