Kwasi Kwarteng has been sacked as chancellor three weeks after his mini-budget unleashed chaos on the economy.
He was appointed to the role by Liz Truss only 38 days ago, making him the second-shortest serving chancellor after Iain Macleod, who died a month after being handed the job by Edward Heath.
Mr Kwarteng’s downfall was set in motion by the mini-budget on 23 September, in which he announced £45bn in unfunded tax cuts.
The mini-budget pushed the pound to a record low against the dollar, sent the cost of government borrowing and mortgage rates up and led to an unprecedented intervention by the Bank of England.
Chris Philp, who was heavily involved in plans for the mini-budget, has also lost his job as chief secretary to the Treasury but has been moved to the Cabinet Office as paymaster general.
In Mr Kwarteng’s letter to Ms Truss accepting he had been sacked, he said: “You have asked me to stand aside as your chancellor. I have accepted.”
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He said he accepted the job “in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices”.
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1:55
Moment Kwarteng sacking announced
But he said the PM’s “vision of optimism, growth and change was right” and “following the status quo was simply not an option”.
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He finished his letter by saying they have been “colleagues and friends for many years” and he believes her “vision is the right one”.
“It has been an honour to serve as your first chancellor. Your success is this country’s success and I wish you well,” he wrote.
Moments later, he was seen leaving No 11 Downing Street and was driven away from the home he had only occupied for just over a month.
Ms Truss replied to his letter by saying she is “deeply sorry to lose” him from government and said “I deeply respect the decision you have taken today” – despite her sacking him.
She said they “share the same vision” for the UK and praised him for the energy price guarantee and the energy bill relief scheme, saying “thanks to your intervention, families will be able to heat their homes this winter and thousands of jobs and livelihoods will be saved”.
Ms Truss and Mr Kwarteng, who have been close friends for years, insisted that the turbulence in the UK economy was part of a global problem exacerbated by the war in Ukraine and post-pandemic recovery.
But last week, after open revolt by Tory MPs and a record surge for Labour in the polls, the prime minister announced the first major reversal of mini-budget policies when she backtracked on scrapping the 45p top rate of income tax.
Image: Kwasi Kwarteng and Liz Truss have been close friends for a long time. Pic: Liz Truss/Instagram
The second U-turn is expected to come on Friday afternoon, with the government set to raise corporation tax from 19% to 25% next April, despite promising not to do so in the mini-budget.
Less than an hour earlier, Mr Kwarteng had landed back in London after cutting short meetings with the International Monetary Fund in Washington DC.
He had been due to make a medium-term fiscal statement on 31 October.
The Conservative Party has now had four chancellors in the past three years – Mr Kwarteng, Nadhim Zahawi, Rishi Sunak and Sajid Javid.
And the next chancellor, who will be chosen by Ms Truss, will be the seventh Tory chancellor in 12 years.
While the PM’s focus will be on choosing a new chancellor, there is set to be a renewed focus on whether Ms Truss can remain in the job.
A Tory MP told Sky News: “The idea that the prime minister can just scapegoat her chancellor and move on is deluded.
“This is her vision. She signed off on every detail and she defended it.”
Events in Ukraine over the last 24 hours have been utterly barbaric. Bad even by the standards of this horrendous war. Â
Multiple Iranian drones and North Korean missiles laden with explosives brought carnage to swathes of the country, killing yet more civilians.
This was Russia’s answer to President Donald Trump’s peace plan and ultimatum. Normally, strangely reluctant to criticise Russia, even Trump was moved to implore Vladimir Putin to “STOP”.
Image: Ukrainian personnel clear rubble after a Russian ballistic missile attack in Kyiv. Pic: AP
Image: A woman is helped after an apartment building was hit by a Russian ballistic missile strike. Pic: Reuters
Image: A Ukrainian serviceman carries a dog out of a house damaged by a Russian airstrike in Kyiv. Pic: AP
But in truth, throughout Trump’s Ukraine peace process – if it can be called that – most of America’s pressure has been on Ukraine.
The peace plan that has emerged from direct US talks, which were mainly with Russia, is one-sided, and to Ukraine and its European partners, it is a surrender plan which is impossible for Ukraine to accept.
Even Russia’s supporter in this war, China, has problems with it, in particular with America’s proposal that Russia is rewarded for its invasion with sovereignty of Crimea.
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Far from heading towards a peace deal, we are now, it seems, careering towards a crunch point that could see America give up on Ukraine completely, possibly blaming Kyiv for failure and renewing relations with Moscow.
Might will be proven right, and Vladimir Putin will be emboldened to do it all over again in a few years, possibly against other countries too. That is the fear in chancelleries across Europe.
There are two key questions now.
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‘Russia is winning peace talks’
Image: A drone explosion over Kyiv. Pic: Reuters
Does Trump mean he will walk away from trying to broker peace or supporting Ukraine entirely?
And if he does, can Ukraine carry on without US help?
European nations have said they will carry on supporting Ukraine. They see its survival and victory as essential for their own security.
They already give Ukraine €40bn in financial and military help. Ukraine would need another €20bn or so to fill the US gap – not that tall an order.
Image: Destruction in Kyiv following a Russian airstrike. Pic: Telegram
Image: A large-scale Russian missile and drone attack hit Kyiv overnight. Pic: Reuters
And they are beefing up their defence industries to do more to give Ukraine what it needs to fight Russia.
Ukraine’s defence increasingly depends on a homegrown drone industry, which doesn’t rely on American backing.
But Ukraine does need US intelligence, aerial defence support and satellite coverage provided by Starlink.
Were they to lose all that, they could be in trouble.
What exactly Trump does if and, as seems increasingly likely, when his deal fails, he is not making clear.
But what seems certain is America is caring less and less for Ukraine’s plight under this president.
Pakistan has halted trade and India has revoked visas as tit-for-tat retaliatory actions ramp up between the two powers after an attack in Kashmir that killed 26 people.
The victims were mostly Indian tourists who had been visiting Pahalgam, a popular tourist destination in the Indian-held part of the territory, which both nuclear-armed nations claim as their own.
In response to the attack, India closed a border crossing, suspended a water-sharing treaty and downgraded diplomatic ties with Pakistan – which it blames for the assault.
Image: Indian security force personnel stand guard at the site of a militant attack on tourists in Pahalgam. Pic: Reuters/Adnan Abidi
The Indian government did not publicly produce any evidence connecting the attack to its neighbour, but said it had “cross-border” links to Pakistan.
Pakistan has denied the accusations and a previously unknown militant group calling itself Kashmir Resistance has claimed responsibility.
On Thursday, India’s foreign ministry said all visas issued to Pakistani nationals would be revoked, effective from Sunday.
It also advised Indian citizens not to travel to Pakistan and announced other measures including cutting the number of diplomatic staff and closing the only functional land border crossing between the nations.
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In return, Pakistan said it was closing its airspace to all Indian-owned and operated airlines and suspending all trade with India – including to and from any third country.
Similarly, it also announced the cancellation of all visas under the SAARC Visa Exemption Scheme – which allows some people to have a “Special Travel” document exempting them from visas.
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Kashmir’s ‘terror attack’: What happened?
‘Act of war’
The moves are just the latest escalation of tensions between the two, as Pakistan warned that any suspension of water supplies by India would be viewed as an “act of war”.
Both Pakistan and India saw protesters turn out on the streets, calling on their respective governments to go further.
Pakistan’s Prime Minister Shehbaz Sharif chaired a meeting of the National Security Committee to respond to India’s measures.
He warned that any attempt to disrupt the Indus Waters Treaty would be met with “full force” from Pakistan.
The landmark treaty has so far survived two wars between the countries, in 1965 and 1971, as well as a major border skirmish in 1999.
It allows for a water-sharing system that is a lifeline for both countries – in particular for Pakistan’s agriculture.
‘Ends of the Earth’
It comes after Indian Prime Minister Narendra Modi promised to pursue those responsible for the attack “to the ends of the Earth”.
Speaking on Thursday at a public meeting in the eastern state of Bihar, he said: “I say to the whole world, India will identify, track, and punish every terrorist and their backers.
“We will pursue them to the ends of the Earth.”
Police in Indian Kashmir published notices on Thursday naming three suspected militants it claimed were “involved in” the attack.
Two of the three suspects were Pakistani nationals, according to the notice.
Image: Pakistan’s Prime Minister Shehbaz Sharif chairs the meeting of the National Security Committee, in Islamabad.
Pic: AP/Prime Minister’s Office
Image: India’s Prime Minister Narendra Modi addresses a rally in Madhubani in the eastern state of Bihar.
Pic: Reuters/Stringer
A contested Kashmir
India and Pakistan each administer a part of Kashmir, but both claim the territory in its entirety.
The region has a long, volatile and complex history.
Recent years has seen India claim that violence in the area has calmed – despite a bloody rebellion against New Delhi raging for decades.
India claims the militancy in Kashmir is Pakistan-backed terrorism.
Pakistan denies this. In a statement Thursday, the country said it supported the self-determination of the Kashmiri people.
Many Muslim Kashmiris, in a Muslim-majority territory, consider the militants part of a home-grown struggle for freedom.
Diplomatic relations between the two were already weak before the latest escalation as Pakistan had expelled India’s envoy after India revoked the semi-autonomous status of Kashmir in 2019.
This deepened tensions in the region but things have largely held stable after the two countries renewed a previous ceasefire agreement in 2021.
Image: A demonstrator shouts as he is stopped by police during a protest near the Pakistan High Commission in New Delhi after the attack.
Pic: Reuters/Stringer
Tens of thousands of people have been killed in Kashmir since the uprising began in 1989, but violence has tapered off in recent years and tourism has surged in the scenic region.
Until the most recent episode, tourists have not been the targets of such attacks.
Donald Trump has claimed a deal to end Russia’s war on Ukraine is “very close” as he heaped pressure on Volodymyr Zelenskyy to “get it done”.
Hours after US secretary of state Marco Rubio withdrew from high-level talks in London on ending the conflict, the American president appeared to vent frustration about Mr Zelenskyy on his Truth Social platform.
“We are very close to a deal, but the man with ‘no cards to play’ should now, finally, GET IT DONE,” Mr Trump said.
“I look forward to being able to help Ukraine, and Russia, get out of this complete and total MESS, that would have never started if I were president!”
Mr Trump also criticised Mr Zelenskyy for telling the Wall Street Journal that Ukraine would not accept giving up Crimea as part of a peace deal with Russia.
And he accused the Ukrainian president of harming peace negotiations with “inflammatory statements”.
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Reports say that the US president’s seven-point peace plan to end the war includes a proposal that America would formally recognise Russian sovereignty over Crimea – which was annexed in 2014 and which Ukraine maintains is its territory.
“It’s inflammatory statements like Zelenskyy’s that makes it so difficult to settle this war,” Mr Trump added. “He has nothing to boast about!
“The situation for Ukraine is dire – He can have peace or, he can fight for another three years before losing the whole country.”
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Speaking later at the White House on Wednesday, Mr Trump said: “I think we have a deal with Russia. We have to get a deal with Zelenskyy.
“I thought Zelenskyy would be easier to deal with, but so far it’s harder. I think we have a deal with both.”
Asked if he was planning to meet Mr Putin soon in Saudi Arabia, he said “probably not, but I hope to meet with him soon thereafter”.
The peace plan, reported by US media over the weekend, would freeze the frontlines in Ukraine as part of the agreement.
London talks on ending war downgraded
It comes after Mr Rubio withdrew from a planned meeting in London on Wednesday, which the UK’s Foreign Secretary David Lammy and Defence Secretary John Healey did attend.
Image: Donald Trump has said Volodymyr Zelenskyy must ‘get it done’ and agree a peace deal. Pics: AP
The downgraded talks were also attended by Keith Kellogg, the US envoy for Ukraine, along with other officials from France, Germany and Ukraine.
Mr Rubio said last week that the US may “walk away” from negotiations due to a lack of progress with Russia and Ukraine – a warning now repeated by vice president JD Vance.
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0:57
JD Vance on Ukraine peace deal
The UK Foreign Office said in a statement that there had been significant progress at the talks on Wednesday, and added: “All parties reiterated their strong support for President Trump’s commitment to stopping the killing and achieving a just and lasting peace.”
On Wednesday evening, the Ukrainian president said “emotions have run high today” but stressed all sides “expressed their views and respectfully received each other’s positions” during the London talks.
Mr Zelenskyy said on social media: “The American side shared its vision. Ukraine and other Europeans presented their inputs.
“And we hope that it is exactly such joint work that will lead to lasting peace.”
He also said, however, that “Ukraine will always act in accordance with its constitution,”.
And he posted a screenshot of the Crimea Declaration – which says the US refuses to recognise Russia’s claim to Crimea – made by former US secretary of state Mike Pompeo in 2018, during Mr Trump’s first term as president.
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It also comes after Ukrainian officials said nine people were killed and almost 50 injured in the city of Marhanets after a Russian drone hit a bus carrying workers on Wednesday morning.
Russia also launched “a massive” drone attack on the central Ukrainian region of Poltava, injuring at least six people, the emergency service said in a post on the Telegram messaging app.