Liz Truss is standing by her Chancellor of the Exchequer Kwasi Kwarteng after the threat of a rebellion in the ruling party forced them into a humiliating reversal on a plan to cut taxes for the top earners in the U.K.
Even so, the reversal on such a major policy just a month into their tenure will inevitably spark speculation about both Truss’s and Kwarteng’s future. While the chancellor told the BBC he hadn’t considered resigning over the issue, the tax cut was a signature part of their economic approach. Within the Tory party, the pair are viewed as a political double-act who have spent years calling for deregulation and low taxes and were preparing to put that into practice.
In a round of broadcast interviews on Monday, Kwarteng sought to deflect the blame for the U.K. market reactions onto global forces, and in particular rising US interest rates. He pushed back against the idea that his policies had led to a “Kwarteng premium” on mortgages.“High interest rates have been driven by the Fed all year,” Kwarteng said. “What that has meant is that there’s a strong dollar and also other banks are putting up interest rates to follow.
Rumblings of discontent had also been growing within the Tories, with Gove telling the BBC that removing the top rate of income tax for the highest earners was the wrong decision and indicated he would not support it.
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