Liz Truss has sacked Kwasi Kwarteng and ripped up her leadership promise to cut corporation tax on the most chaotic day of her six-week premiership.
The Prime Minister pulled the trigger on her chancellor after just 38 days in office, making him the second shortest-serving Treasury boss in modern political history.
He was summoned to No 10 to be fired after returning early from a trip to the US amid economic chaos and a growing Tory rebellion over the mini-Budget.
Jeremy Hunt, a former health and foreign secretary, has been announced as the new Chancellor.
It came after Ms Truss spent the morning in Downing Street preparing to pull off an about-turn to shore up her own position.
She was finalising plans to abandon her pledge to cut corporation tax and instead announce it will be raised from 19 to 25 per cent next April.
The pledge to cut the rate businesses pay on their profits was one of the main dividing lines between her and rival Rishi Sunak during the leadership contest.
In a letter to the Prime Minister confirming his sacking, Mr Kwarteng took an apparent swipe at the about-turn by warning against “following the status quo”.
“For too long this country has been dogged by low growth rates and high taxation - that must still change if this country is to succeed,” he told her.
On a day of chaos, the change of heart came just hours after a minister was sent on the airwaves to insist there would be no more climb downs.
Greg Hands, the newly appointed trade minister, told the morning broadcast round there were “absolutely no plans to change anything” in the mini-Budget.
“The Prime Minister and the Chancellor are absolutely determined to stick to the growth plan, to stick to the changes they outlined,” he told LBC radio.
He added: “There’s no change to plans on corporation tax.”
Sacking Kwarteng is not enough to save Truss
Many Tory MPs who supported Mr Sunak have been openly suggesting for several days that Ms Truss's position is no longer tenable and she will have to go.
One senior backbench MP said the Prime Minister’s sacking of Mr Kwarteng would not be enough to save her skin.
“I’m afraid it’s gone beyond the point where things can be reversed, there’s just a total loss of confidence,” they told The Telegraph.
“It is irretrievable. The better alternative is to bite the bullet and go with a new leader rather than stick with this lame duck.”
The climbdown on corporation tax further added to her woes by also alienating those MPs who supported her campaign for No 10.
One backbencher who backed her from the beginning said: “I think her leadership authority is now shattered. Party discipline has totally broken down.”
“If the corporation tax U-turn goes ahead, I think people will pretty much think she is finished,” a former Cabinet minister added.
Tory rebels ‘selfish and self-seeking’
But allies of Ms Truss publicly leapt to her defence and attacked their colleagues, adding to the febrile mood within the party.
Paul Bristow, the Tory MP for Peterborough, accused those rebelling against the Prime Minister of being “selfish and self-seeking”.
He suggested they should be deselected, adding: “They don’t deserve to be Conservative MPs. Plenty of talent on our candidates list.”
Nadine Dorries, a former culture secretary and key ally of Ms Truss, said male MPs who were “absurdly called grandee” were behind the ructions.
“They agitated to remove Boris Johnson and now they will continue plotting until they get their way. It’s a plot not to remove a PM but to overturn democracy,” she said.
‘We need a change in government’
Rachel Reeves, Labour’s shadow chancellor, said the sacking of Mr Kwarteng “doesn’t undo the damage that’s already been done” by the mini-Budget.
“Liz Truss and the Conservatives crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage,” she said.
“We don’t just need a change in Chancellor, we need a change in government.”
Sir Ed Davey, the leader of the Liberal Democrats, said the chaos meant the Prime Minister should call a General Election.
“This mustn’t just be the end of Kwarteng’s disastrous chancellorship, it should be the death knell of the Conservatives’ reckless mismanagement of our economy,” he said.