Truss confirms new tax U-turn and insists she will stay as PM

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It's been a busy day in the world of UK politics. Here's a recap of some of the main developments:

• Liz Truss has sought to calm the financial markets -- and restore confidence in her government -- by sacking her chancellor and announcing a second U-turn on a major economic policy
• The PM reversed a key policy to scrap the planned rise in corporation tax from 19% to 25% saying the move should raise £18bn a year in tax revenue for the government
• The PM made the announcement during an eight-minute news conference where she insisted she would stay on as PM to see through her "mission" to get the economy growing

• She has made former health secretary Jeremy Hunt her new chancellor

• Truss said Hunt shared her vision for the country and he will deliver the medium-term fiscal plan at the end of the month
• Government borrowing costs rose and the pound's value fell after the PM's latest U-turn
• Some Tory MPs have been calling for the prime minister to resign following the news conference - one former minister told the BBC: "we cannot go on like this indefinitely".

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Government borrowing costs rose this afternoon after the prime minister announced another U-turn on the mini-budget.

The interest rate - or yield - on bonds due to be repaid in 30 years' time climbed to 4.85%.

The pound, which initially held firm earlier in the day, also lost ground.

The moves came as Prime Minister Liz Truss sacked her chancellor, Kwasi Kwarteng, and said a rise in corporation tax would now go ahead.

However, some economists warned that the latest developments might not be enough to restore the UK's credibility.

"It's unlikely that the removal of Kwasi Kwarteng as chancellor and the new plans to cancel the cancellation of the rise in corporation tax from 19% to 25% from next April will be enough on their own to regain the full confidence of the financial markets," said Paul Dales, Chief UK economist at Capital Economics.

Read the full story here.

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Welsh Secretary Sir Robert Buckland has warned against "throwing another prime minister to the wolves".

Appearing on BBC Radio 4’s Any Questions in Gloucester, he said: "This has been a very difficult political week, I’m not going to shy away from that, but do I think that means her position is untenable? No, I do not.”

The audience laughed as he told the programme: “I am not going to deny it is a difficult situation, I am not going to deny it at all.”

Buckland added: “I think if we start with gay abandon, throwing another prime minister to the wolves, we’re going to be faced with more delay, more debate, more instability, exactly the opposite of what I think we all need as we go into this winter.

“The last thing we need is another internal party debate.”

The word U-turn normally refers to the reversal of a policy.

And by any measure, Prime Minister Liz Truss' decision to scrap the cancellation of her former leadership rival Rishi Sunak's rise on corporation tax is one of the biggest fiscal U-turns on record.

Over five years, it is worth £67bn, the biggest single revenue measure of the mini-budget.

But U-turn doesn't really adequately capture what we have seen today.

This is not about the extraction of a serving chancellor across the Atlantic from important meetings at the International Monetary Fund in Washington DC.

This is the almost total capitulation of the economic philosophy that became known as "Trussonomics".

The totemic heart of it was the idea that lower corporation tax would pay for itself with higher growth.

The prime minister has now, in an emergency, not just hiked corporation tax, but presumably now agrees with the analysis, the so-called Treasury "orthodoxy", that it will credibly and permanently raise tens of billions of pounds.

Read the full story here.

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An ally of Liz Truss has come out to bat for the prime minister, saying his Tory Party colleagues are acting "like a bunch of hyenas" amid speculation they will try to oust her.

Conservative MP Christopher Chope said he still supports Truss, adding it would be "ridiculous" to have another change in prime minister.

"We can't possibly force another prime minister out of office. We've just got to calm down and try and give the prime minister support," he told BBC News.

"It's going to be suicide for the Conservative Party if we force out another prime minister who is trying to do their best in very difficult circumstances."

However, Chope said he supported Truss in the leadership race for her policies and is now "in despair" over her U-turn today.

He said raising corporation tax is going to be "damaging to the prospects for growth" and is "totally inconsistent with what she put forward when seeking election".

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Jeremy Hunt is "very much" the man to steady the economic turmoil and will be "100% committed" as chancellor, according to an ally.

Steve Brine, who worked with Hunt in the Department of Health, says the new chancellor will ensure that "policy meets with reality in a sensible way".

"I've seen him up close, under intense pressure. And Jeremy is calm personified. He speaks very carefully and he gives confidence when he does so," Brine told BBC Radio 4's PM programme.

"He is not continuity Kwarteng. I think it's a good move...it puts a very sensible grown up back in the room."

Brine went on to describe Hunt as the "chief executive" in his partnership with Liz Truss, with the prime minister as "chairman".

"He won't be licking his lips at the prospect of becoming chancellor at this time. But this is a moment to be there for the country and in my experience of him, it's always been country first and he will see that as his job right now," he said.

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Kemi Badenoch, the international trade secretary, says Liz Truss has her "full support" after "a difficult day".

The former leadership contender tweeted: "To say it's been a difficult day would be an understatement.

"We knew the scale of the challenge this autumn given multiple global headwinds would be unprecedented.

"Our prime minister is working flat out to get the country through these turbulent times."

Tory MP and Truss loyalist Chris Loder said he was "disappointed" at the prime minister's U-turn and said a number of her supporters feel it is difficult for her to continue.

Speaking to BBC Radio 4's PM programme, he said he still backs Truss but admitted it had been a "difficult few days".

He said: "I do hope that the prime minister can continue. But I get the feeling from the parliamentary party and a number of her supporters that is actually quite difficult at the moment."

Another Truss-supporting MP Derek Thomas, who represents St Ives, said corporation tax rising to 25% is "frankly ridiculous and un-Conservative".

He told the BBC: "I would have thought that was the one we really should have stuck with."

Conservative grandee Lord William Hague has said Liz Truss's position as prime minister "hangs by a thread", following today's events.

The former Tory party leader told Times Radio: "It's been a catastrophic episode. And I think it hangs by a thread is the honest answer to your question of her position, because yes these were her policies too.

"And plenty of warning was given by many of us about what would happen if we had unfunded tax cuts and whether it would be financially and politically sustainable."

Well, what a whirlwind 24 hours it's been.

Kwasi Kwarteng sacked as chancellor, less than a day after saying he wasn't going anywhere.

Prime Minister Liz Truss replaced him with former health and foreign secretary Jeremy Hunt.

Meanwhile, she says she'll stay on as PM after announcing another U-turn in her government's tax-cut plan - to reverse her plan to scrap an increase in corporation tax.

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Here are the latest developments on another busy day in Westminster which saw the government's latest attempt to try and calm the UK's financial markets:

• Prime Minister Liz Truss U-turned on her plan to cancel a planned increase to corporation tax (from 19% to 25%) and sacked her former chancellor, Kwasi Kwarteng, replacing him with former health and foreign secretary Jeremy Hunt
• Hunt will deliver the government's fiscal plan on 31 October as planned, the Treasury confirmed
• Truss said she was "absolutely determined" to see through her promise to deliver economic growth, when asked in a press conference why she should remain as PM
• Kwarteng said he was "asked to stand aside" in a letter addressed to the PM, while Truss told reporters she was "incredibly sorry" to lose him as chancellor
• Reaction to the day's events has been pouring in from both the PM's supporters and critics. Cabinet ministers say she has acted decisively, while other Tory MPs have said she needs to go
• Conversations are advancing in private in Westminster about plans to topple Liz Truss, says the BBC's political editor Chris Mason

The political drama unfolding in Britain is being watched closely in Brussels.

One diplomat even mentioned the contest posed, by a newspaper, of whether Liz Truss can outlast a lettuce.

If there is a sense of schadenfreude - pleasure from another’s misfortune - amongst some who dislike the Tory Party for what they see as the aberration of Brexit, there’s concern too.

The UK is a major economy on the EU’s doorstep and the continent is wrestling with its own energy and cost of living crises.

Then there’s the unfinished business from Brexit of how to fix problematic trading arrangements for Northern Ireland.

And British support for Ukraine, following the Russian invasion, has been highly valued.

Who resides in Downing Street matters for Europe and, yet again, a question mark hovers over how long it’s current inhabitant can remain.

Many tell me they traditionally see the UK as a “sensible” country albeit one with a robust, even confrontational, political system. The current volatility is attracting both fascination and disbelief.

Liz Truss will hope that ditching her chancellor and the government's planned cut in corporation tax will buy her time with the financial markets and her party.

Former cabinet minister Sir John Redwood says new chancellor Jeremy Hunt and the prime minister "have a lot of work to do" to get the economy going. But he has reaffirmed his support for Truss, saying she is the right person to lead the Tories to the next general election.

He is also urging his fellow Conservative MPs to give her "every support and some good advice" to get to a "winning economic policy as soon as possible".

Another senior Conservative Sir Bernard Jenkin tweeted: "We must now be calm. Rash talk of ditching the PM, or calls for a general election, will not calm the financial markets."

Shrewsbury and Atcham MP Daniel Kawczynski added: "We are British and are not going to throw this lady under a bus when she has started an incredibly difficult job and is handling some very serious economic problems.

"Any Tory MP who challenges her, I hope the [local party] association remembers his or her conduct - it would be wrong and immoral."

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Liz Truss will work from Chequers this weekend after another frenetic week for the prime minister. Chequers - a mansion set in rural south-east England - is the UK PM's official country residence.

Today, which marked Truss's 38th day in office, saw the PM sack her chancellor and U-turn on corporation tax in a bid to reassure the markets.

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Liz Truss's credibility is "completely shot", Professor Tim Bale, from the politics department at Queen Mary University of London, has said.

Prof Bale said MPs can't "see a way back" under Truss and it would be too "embarrassing and difficult" to replace her.

Truss can no longer use Kwarteng as a human shield, he added, saying that the PM is now "left exposed".

"I just can't see her lasting that long. She might get to the end of the month, she might even get to Christmas, but beyond that, it's very, very difficult to see," he said.

Speaking about the prime minister's earlier press conference, he said Truss "didn't really dare carry on for more than about 10 minutes" in case she couldn't answer the questions journalists put to her.

Jeremy Hunt is the UK's fourth chancellor of the exchequer in just over three months, and the fifth person to hold the role in three years.

He replaces Kwasi Kwarteng, who was chancellor for just 38 days. Only four people have held the role for fewer days than him: Edward Law in 1806, Charles Abbott in 1827, Thomas Denman in 1834 and Iain MacLeod - who died just a month after his appointment in 1970.