Kwasi Kwarteng will be sacked as chancellor as Liz Truss tries to restore her political authority ahead of a U-turn on parts of her disastrous mini-budget later on Friday, according to sources.
A Downing Street source confirmed to the NSEMGH, the prime minister intended to get Kwarteng to “carry the can” over her climbdown as she sought to calm the markets and the nerves of jittery Tory MPs.
Truss is meeting Kwarteng, previously her closest political ally and co-architect of her plan for growth, for crisis talks in Downing Street after he dashed back overnight from an International Monetary Fund (IMF) meeting in Washington.
Whitehall insiders told the NSEMGH the pair held different views on how far the government should go in reversing key elements of its plan to steady the markets and placate anxious Conservative MPs.
Treasury insiders predicted that the former chancellor Sajid Javid or Cabinet Office minister Nadhim Zahawi, who held the post for 63 days this summer, could replace Kwarteng.
Truss is under intense pressure from Conservative MPs and the markets, leading No 10 to redraw the mini-budget, paving the way for a major U-turn on her signature corporation tax cut.
After weeks of defending the proposal for unfunded tax cuts on a huge scale, government sources have told the Guardian that a climbdown on the plan to scrap the rise in corporation tax was now “on the table”.
Kwarteng has been forced to deny his position as chancellor is in peril, insisting he was “absolutely, 100%” confident he would still be in post next month despite a growing Tory rebellion.
When asked by the Daily Telegraph on Thursday whether people should expect a U-turn in corporation tax, he replied: “Let’s see.”